Oral Answers to Questions

HOME OFFICE

The Secretary of State was asked—

"Drinking Responsibly"

Iain Wright: What response he has received to his consultation paper "Drinking Responsibly"; and if he will make a statement.

Hazel Blears: The consultation closed on Monday 28 February. We have received more than 150 responses from a wide range of organisations and individuals, including the Local Government Association, trading standards departments, the Association of Chief Police Officers, alcohol trade associations and individual companies, Alcohol Concern and the Portman Group. We shall consider each and every response carefully, and will announce how we plan to proceed as soon as possible.

Iain Wright: I welcome the "Drinking Responsibly" document, especially the chapter on changing the culture. It is right and proper that we change the binge drinking culture that fuels violence and antisocial behaviour. Does my hon. Friend agree that an effective step towards changing that culture is the rapid introduction and implementation of strict drinking banning orders, whereby persistent offenders who cause trouble through irresponsible drinking are banned from town centre areas, and pubs and clubs that continue to sell to those individuals are fined or at worst closed down?

Hazel Blears: My hon. Friend has led the campaign—from the front, dare I say?—in his local community and in the House. He is absolutely right; we need to change the culture for the long term and that is why our proposals are not just for drinking banning orders, which will target the minority of people who go out to get drunk and cause trouble, but also include alcohol disorder zones where, again, we are trying to change the culture so that we get people to drink responsibly, not irresponsibly.

Damian Green: All the evidence is that people are drinking more and drinking more heavily. Is the Minister seriously telling the House that proposals to introduce 24-hour drinking will actually lead to a reduction in the amount of alcohol consumed, or does she accept plain common sense—that it will lead to an increase in the amount of alcohol consumed?

Hazel Blears: What we are trying to ensure is that people drink responsibly, and for 90 per cent. of the public that is exactly what they do. They have a good night out with their friends and do not cause trouble. Our policies are designed to target the minority who cause trouble in our town and city centres on a Friday and Saturday night. It is not about 24-hour drinking; it is about flexible licensing hours, which means that we can allow companies to be flexible as long as they are responsible and, most importantly, those decisions will now be made locally by local authorities, in touch with their communities and able to make the decisions in a properly responsible way.

David Kidney: Does it worry my hon. Friend that all the good in the Licensing Act 2003 will be undone by uninformed criticism such as the one we have just heard? Is not the answer to that the alcohol harm reduction strategy, and would not that document be more effective if it had the same tough targets and the money to spend as we have for the drugs strategy?

Hazel Blears: I am glad that my hon. Friend acknowledges the importance of the alcohol harm reduction strategy, in that it does not simply apply to enforcement but looks at health harms and includes action by the Department for Education and Skills, targeting some of our young people. It is an holistic, overarching strategy. I entirely understand my hon. Friend's point: he wants tough targets behind it. I can assure him that we will be pushing that forward, monitoring and evaluating our progress. He is right that the Licensing Act will help us in many situations. It makes it an offence to sell alcohol to under-18s anywhere—no exemptions—it increases the fine from £1,000 to £5,000, and it allows us to suspend and forfeit licences on the first occasion of an offence, not the second. The Licensing Act is not soft; it is fairly tough legislation.

David Davis: Between 1997 and 2003, the number of people cautioned or convicted for being drunk and disorderly fell by 10,000. Why is that?

Hazel Blears: The right hon. Gentleman raises an important point about the police using their powers to tackle under-age drinking and irresponsible drinking. He will be aware of the fact that we have had two major alcohol misuse enforcement campaigns—one in the summer utilised the new fixed penalty notices that we have brought into effect. I think that 4,000 fixed penalty notices were issued in the first alcohol misuse enforcement campaign. I am saying to the police that they need to use their powers, but that often it is better to use a fixed penalty notice—an on-the-spot fine, a short, sharp shock—rather than a formal prosecution.

David Davis: If I were the Minister I would not blame the police. The real reason for the failure between 1997 and 2003 is that the Government diverted police resources and effort away from basic conventional policing and they let the problem get out of hand. Now, the 24-hour licensing laws that are coming along will make the problem worse. Not only did the Government fail by letting the number of drunk and disorderly charges drop by 10,000, but in that time the number of under-18s cautioned or convicted fell by 80 per cent. The Minister's gimmicks will not solve that. The chief executive of Yates said that her proposals for 24-hour drinking will lead to a dramatic increase in disorder. Why are the Government ignoring expert advice and pressing ahead with 24-hour drinking before they have found a proven solution to the problem?

Hazel Blears: The right hon. Gentleman is wrong. I was not blaming the police for the situation; I was saying that the police have pressed us to introduce more appropriate powers so that they can deal with irresponsible drinking, and that is exactly what we have done. If he has complaints that officers have been taken off the streets, he need only look to the Conservative party's record—there were 1,100 fewer police officers on our streets while it was in charge. We now have 140,000 police officers and 4,000 community support officers, giving people that visible presence on the streets. I was with a borough commander in Scarborough on Friday who was one of the leading lights of the alcohol misuse enforcement campaign. He said that it was brilliant. The police were able to get out on the streets, do their business and make a real difference in their town centre.

Kelvin Hopkins: Has my hon. Friend received any representation on foetal alcohol syndrome and the serious dangers to children posed by women drinking during pregnancy? If so, will she discuss these matters with her colleagues at the Department of Health?

Hazel Blears: Yes, I am aware of the importance of that extremely distressing condition. That is why, as I said to my hon. Friend the Member for Stafford (Mr. Kidney), the alcohol harm reduction strategy involves not just the Home Office, but, crucially, the Department of Health, which is a joint sponsor of the strategy with us. Of course, I will continue to discuss these matters, together with the effects of chronic drinking, which is also a concern for us. We are now beginning to see people in hospital with liver diseases at an earlier age than ever before. Therefore, as well as binge drinking we also need to tackle chronic drinking.

Mark Oaten: The Minister will be aware that the fees paid by licensed premises have been restructured so that large, city drinking venues pay more, quite rightly—but will she explain why nightclubs have been excluded from the new regime? Is she aware that the industry claims on its website to have "played a blinder" in the negotiations with the Government by avoiding paying the new fee? Surely it is not just pubs that cause problems on Friday and Saturday nights. Many of the problems relate to nightclubs. Why have they been excluded from the new fee arrangement?

Hazel Blears: I am sure that the hon. Gentleman is aware that we had several revisions of the proposed licensing fee structure as a result of consultation with local authorities and the industry. We now have a fee structure that will meet the costs not just of administration but, importantly, inspection and enforcement as well. Certainly, my dealings with the LGA indicate that it is content with the current fee structure. We have undertaken to review it again in 12 months' time to find out whether it meets all those requirements. He knows that we have included factors to multiply the amount paid by those premises that are likely to cause the most harm and the most risk. That is an entirely proportionate way to approach the subject, and we have tried to get as much consensus as we can. I am delighted that my colleagues at the Department for Culture, Media and Sport, through negotiation with the industry and the LGA, have achieved such a satisfactory result.

Crime and Disorder Reduction Partnerships

Christine Russell: If he will make a statement on partnerships between local authorities and the police for the reduction of crime and antisocial behaviour.

Charles Clarke: The Crime and Disorder Act 1998, as amended by the Police Reform Act 2002, places a statutory duty on the police and local authorities, along with other agencies, to work together in crime and disorder reduction partnerships. Those partnerships have been a vital factor in reducing crime and antisocial behaviour, and their local strategies are available for consideration and improvement.

Christine Russell: I thank my right hon. Friend for that reply. He will be aware that good partnership working in my constituency between the local authorities, the police and the fire service has led to significant reductions in crimes such as domestic burglaries, which have gone down by 40 per cent. in the past 12 months, and vehicle arson, which is down by more than 30 per cent. Will he join me in congratulating Chester city council on making community safety its No. 1 priority and on agreeing to invest significantly in a city-wide community warden scheme that will be rolled out from next month with the full co-operation of the police?

Charles Clarke: I will certainly join my hon. Friend in congratulating Chester city council on that initiative, and I would go further: I wish that every district council in the country would take the kind of leadership role that Chester has adopted. She would also want me to congratulate Chester city council's partners, who have worked in Chester and more widely in Cheshire to address these issues. The point that she makes, which is fundamental, is that it is through the working partnership that the reductions in crime and antisocial behaviour are being achieved. That cannot be done by the police or any other agency alone; it can be done best by real working partnerships, and I commend Chester for what it has achieved in those areas.

Elfyn Llwyd: I recognise the good work done by the National Neighbourhood Watch Association, and I am sure that the right hon. Gentleman will agree with that. However, why are Crimestoppers, Crime Concern and Victim Support all supported by central Government, while neighbourhood watch schemes are not, although they do such good work? I cannot quite work that one out.

Charles Clarke: I commend the neighbourhood watch scheme on its important work. However, the hon. Gentleman put his finger on the issue in the way in which he asked his question. He listed a range of organisations that are doing absolutely excellent work in the field. Sometimes, the organisations work in parallel with each other, and sometimes, there is even an element of competition. We want to ensure that they can work together, which is why a major conference is being held at the end of the week to try to get an agreement on how we can achieve joint working in such areas. Each of the initiatives is an attempt to increase community involvement in fighting crime, which, as the hon. Gentleman implied in his question, is absolutely within the thrust of the entire approach on crime and disorder reduction partnerships that we have followed.

Chris Bryant: One of the things that takes up a great deal of police time these days is taking evidence from witnesses. Of course that process is vital if we are to secure more convictions, but it is often so laborious that an individual police officer might be tied down for an hour or an hour and a half simply taking one witness statement. Is the Home Office examining ways of speeding up the process and making it less laborious, so that we can free up more time for police officers to be out on the streets?

Charles Clarke: The short answer is yes, and the type of partnership that I am describing is a powerful way of achieving just that. If a local authority housing department works with the police, it can strongly assist in the gathering of evidence of antisocial behaviour, which allows convictions to be secured. Yes, we are doing what my hon. Friend asks, but we will do more still.

Julian Lewis: What effect does the Home Secretary think it would have on levels of crime, disorder and antisocial behaviour if the legal age for purchasing alcohol was reduced to 16, which was confirmed as the Liberal Democrats' policy in the House on 25 January?

Mr. Speaker: Order. We will not go into that.

Private Security Industry Act

David Cairns: What recent discussions he has had with Ministers in the Scottish Executive concerning the extension of the Private Security Industry Act 2001 to Scotland.

Fiona Mactaggart: Since Scottish Ministers announced in March 2003 that they had agreed with Home Office Ministers and the Security Industry Authority that the regulation of the private security industry in Scotland would be achieved by the extension of the Private Security Industry Act 2001 to Scotland, there have been continuing communications at ministerial and official level. The necessary provisions are now in clause 166 and schedule 16 of the Serious Organised Crime and Police Bill. The Scottish Parliament consented to the extension through the Bill in a Sewel motion on 2 February this year.

David Cairns: I thank my hon. Friend for that answer and welcome the extension of the Act to Scotland. Although the vast majority of bouncers behave responsibly, the behaviour of a significant minority is no better than that of criminal thugs. Now that the Act is up and running in England and Wales, what evidence is there that its provisions are cutting down on the criminality committed by bouncers in pubs and night clubs and thus affording greater protection to our constituents?

Fiona Mactaggart: The evidence is contained in the fact that of those who have applied for licences, almost 1,000 have had their applications refused. People must undergo proper training and a Criminal Records Bureau check before acquiring a licence. As the Act rolls out, the uptake of training is increasing because more door supervisors are applying for it. We can deliver something that my hon. Friend has campaigned for determinedly in Scotland and drive out the connections with organised crime and criminality that have sometimes existed in the door supervision industry.

Asylum Seekers

Teddy Taylor: How many asylum seekers have been denied the right to remain in the UK over the past 12 months; and how many of these persons have left the country.

Des Browne: In 2004, there were 51,300 cases—involving 62,700 people including dependants—of people who had been refused asylum or lost an appeal. Of that specific number, 3,500 principal applicants have so far been removed—that is 4,100 people including dependants—and others of course will have left the country without informing the authorities. As we do not have embarkation controls, it is not possible to determine whether that has happened. E-borders and identity cards will enable us to monitor that far more precisely in the future.

Teddy Taylor: Although I accept that this is not an easy problem to solve, is the Minister aware of public concern that as of last year, it seemed to take an average of 20 months after people's final refusal to remove them from the country? Is the problem the redocumentation of people who destroyed all their papers before they made their applications and, if so, is there anything that we can do about it? I emphasise the fact that I am well aware that it is not easy to solve the problem, but how can we sort this out?

Des Browne: I am grateful to the hon. Gentleman for the manner in which he asked his supplementary question. He identifies one of a number of problems with the removal of failed asylum seekers. There are, for example, administrative difficulties involving certain countries in redocumenting their citizens. There was a practice until November, which was accepted across the House, of not removing people, or enforcing the removal of people, to Zimbabwe. I think that hon. Members will know that there is a direct correlation between our ability forcibly to remove asylum seekers and the intake from certain countries. The hon. Gentleman is right to identify the question of redocumentation as being the principal concern. That is why, in the Asylum and Immigration (Treatment of Claimants, etc) Act 2004, we criminalised the deliberate destruction of documents. We have been prosecuting people for that in significant numbers. The number of those who have been arriving at ports inadequately documented, since the introduction of the 2004 legislation in October, has been reduced by 50 per cent.

Keith Vaz: My hon. Friend will have been as shocked as I and others have been by the BBC film about Oakington. He will know that on the Global Solutions Ltd. website it is stated that the employees at Oakington have been screened by the Home Office and subjected to vigorous vetting. I know that my hon. Friend has set up an inquiry into these matters, and I am glad that he did so so quickly. However, for how long will the inquiry last? What implications are there for the way in which Global Solutions conducts the rest of the contract that it has with the Home Office in respect of other institutions?

Des Browne: I am grateful to my hon. Friend for his question. As I made clear at the time of the programme, I take these allegations extremely seriously. That is why, immediately after the programme, when I was in a position to have fuller facts than the BBC was able to give me prior to the programme going out, I announced an independent inquiry by Stephen Shaw, the prisons ombudsman, into the allegations contained in the programme. I am sure that my hon. Friend will appreciate that it would not be appropriate for me to comment in detail on the allegations until the investigation is completed and Stephen Shaw has reported.
	First, while Stephen Shaw's inquiry is under way, the immigration and nationality directorate is examining how our procedures can be strengthened. Secondly, I have asked Stephen Shaw to report quickly. Once he has reported back and made recommendations, I will be able to consider any implications that there are for the remainder of the detention estate and, of course, our relationship with GSL.

Tony Baldry: Does the Minister accept that there is cross-party disgust at any racist treatment of asylum seekers, refugees or migrants? Following on from the question of the hon. Member for Leicester, East (Keith Vaz), will the hon. Gentleman confirm that if Global Solutions is found to be wanting in Mr. Shaw's independent inquiry, the Home Office will consider suspending its contracts? The company has already been subject to an independent inquiry into the burning down of Yarl's Wood. It does not help to inspire any confidence in my constituents in and around Bicester that it is a fit and proper company to run an accommodation centre for asylum seekers when they see on their televisions refugees being treated so appallingly.

Des Browne: I am grateful to the hon. Gentleman for his question. I accept that he speaks for all parties in the House in his condemnation of racism. I have made it clear that racism has no part anywhere in our society, and particularly not in the immigration system. Detention and removal are an essential part of an effective immigration control system, but they must be carried out with humanity and dignity and in accordance with our laws, especially those laws designed to protect people from racial discrimination.
	The point that the hon. Gentleman makes about our continued relationship with GSL will have to be considered in the light of the report from Stephen Shaw. GSL is a successful company in managing and carrying out many contracts with the Government. Until Stephen Shaw reports, I am sure that the hon. Gentleman will accept that it would not be appropriate for me to comment any further.

Ann Cryer: How many immigrants with permission for permanent settlement on the ground of marriage have been removed for not staying within the marriage for two years? I ask the question because my constituents—the women concerned—are told that they have become third parties and, therefore, cannot gain information.

Des Browne: I commend my hon. Friend on her continued, consistent and appropriate campaigning in this area, which is of great concern not just to her constituents, but to many people throughout the country. We have made changes to the immigration rules to counter the abuse of marriage that she identified, and the practice should be abhorred by everyone. I am not in a position to give her the specific information that she requires at the Dispatch Box, but if it is collected in a communicable form I will give it to her. Since I have assumed responsibility for this area of work, I have done my best to increase the amount of information that can be communicated to women, including those for whom my hon. Friend speaks.

Tom Harris: Is it not the case that the process of removing illegal immigrants who arrive in the country as asylum seekers and, indeed, the system for preventing them from coming here in the first place would be profoundly undermined if the immigration service suffered the cuts proposed by the Opposition?

Mr. Speaker: Order. It was a waste of time calling the hon. Gentleman.

Antisocial Behaviour

Sally Keeble: What progress is being made in tackling antisocial behaviour.

David Wright: What assessment he has made of measures used to tackle antisocial behaviour.

Paul Goggins: The national antisocial behaviour survey published on 28 October last year showed that an estimated 66,000 cases of antisocial behaviour were tackled in the 12-month period from October 2003 to September 2004, and ranged from early intervention to court proceedings. Between April 1999 and September 2004, 3,826 antisocial behaviour orders were issued, nearly 20 per cent. of which were issued in the most recent quarter between July and September 2004.

Sally Keeble: I welcome my hon. Friend's reply and would be grateful if he could provide a constituency breakdown of those figures and place it in the Library. Is he aware that the head of the Government's antisocial behaviour unit recently came to Northampton and received a warm welcome from people in Thorplands, who were keen that action should be taken to deal with antisocial behaviour in their area? What is his Department doing to make sure that there is a consistent application of the new powers by local authorities and police forces, and will it make sure that all areas take up those powers and use the orders, giving local communities the benefit of the peace and security to which they are entitled?

Paul Goggins: I am grateful to my hon. Friend for her warm welcome, and I am pleased that the Home Office and the authorities in her local area are working well together. That occurs throughout the country—positive relationships are developing. One Home Office initiative is the Together campaign academy, which has made sure that 6,500 local officials are fully trained and know what powers they can use to ensure that antisocial behaviour legislation works in practice. It is one thing to issue an order, but it is another to make sure that it is properly enforced. It is vital that the message goes out: these are serious powers and they need to be used to deal with this serious problem.

David Wright: One of the strands of antisocial behaviour about which people in Telford are particularly concerned is the illegal use of motorbikes, particularly the new small mokes. What work has my hon. Friend done with the Department for Transport to clamp down on that particular form of antisocial behaviour?

Paul Goggins: I am grateful to my hon. Friend, who takes these issues very seriously and works with his local authorities to make sure that the fight against antisocial behaviour continues in his area. It is vital that the police take appropriate action to deal with the illegal or dangerous use of a vehicle, no matter how big or small. In the case that he mentioned, it is possible to confiscate such a vehicle if it is used illegally, and I am confident that he will encourage law enforcement agencies in his area to take such action if necessary.

Colin Breed: The fight against antisocial behaviour is often hampered by the lack of fully staffed custody suites, particularly in rural areas. Would the Minister review the availability of such suites, particularly on Friday and Saturday nights, so that police are not sent a long way to other custody areas? At such times they are off the streets and cannot return to policing duties in the evenings.

Paul Goggins: The police locally are always looking at those issues, but I am grateful to the hon. Gentleman for his support for the fight against antisocial behaviour. He was, perhaps, a little late in coming to the fight, but his support is very welcome none the less. It is essential that we make sure that the resources required are available, and that the police use them appropriately in taking out antisocial behaviour orders, developing acceptable behaviour contracts and working with parents to prevent the kind of antisocial behaviour that blights our community, as well as dealing with the symptoms of those problems.

Adrian Bailey: My area in the west midlands has been in the forefront of the campaign to get antisocial behaviour orders, and has been helped considerably by the Together campaign. However, I am getting reports that there is a certain inconsistency on the part of the magistracy, particularly in upholding antisocial behaviour orders when there are reported breaches of them. Has my hon. Friend considered holding special antisocial behaviour courts in order to build up the consistency and expertise needed to make the policy fully effective?

Paul Goggins: I can offer my hon. Friend some reassurance. There are now 100 antisocial behaviour courts, and there are prosecutors whose job is specifically to deal with antisocial behaviour. It is important that we have a consistent approach, so I am pleased that he mentioned the Together campaign, as it is an essential way of making sure that we get a consistent approach across the country. There is a Together website and action line. We have had the Taking a Stand awards, which again highlight the important role that local people can play in the campaign. In the end, although an antisocial behaviour order is a civil order, breaching it is a criminal offence that carries a hefty penalty.

Andrew Mitchell: Is not the Minister's response stunningly complacent? Does he not know that, according to his Department's own figures, there are more than 15 million acts of antisocial behaviour every year—that is, one incident every two seconds? How does that square with his 1997 manifesto pledge to
	"tackle the unacceptable level of anti-social behaviour . . . on our streets"?

Paul Goggins: I do not know whether to take "stunning" or "complacent" as the most important adjective to describe my performance—but let me leave the hon. Gentleman in no doubt whatever that this is an important issue for our communities throughout the country. We know, as Members of Parliament, that it is a serious issue. The Government have put in place the powers and the resources to deal with it. We are dealing with it. People recognise the difference that the antisocial behaviour legislation is making and the action that goes with it is improving our local communities. It is about time the hon. Gentleman got behind the campaign, instead of criticising it.

Drug Traffickers

Tom Levitt: What measures he plans to take to deal with drug traffickers.

Caroline Flint: We are targeting class A drug traffickers at every stage of the supply line, from source to street.We are creating the Serious Organised Crime Agency to bring a new focus to tackling drug trafficking and other forms of organised crime. We are also providing new powers for the law enforcement authorities, including the power to compel individuals to co-operate with investigators, in addition to existing powers to shut down crack houses and seize criminal assets, both of which, I am pleased to say, are proving effective.

Tom Levitt: I am sure that my hon. Friend would wish to join me in congratulating Chief Superintendent Flint and B division of Derbyshire constabulary on two big drugs raids recently, which resulted in the seizure of more than £1 million worth of drugs plus other assets, and over a dozen arrests in two towns in High Peak, New Mills and Glossop. Those arrests would not have been possible without, first, the information coming from members of the public, and secondly, work not just by the police, but with other agencies as well. Can my hon. Friend describe how she will help to promote a joined-up approach across all agencies towards tackling drug trafficking?

Caroline Flint: I am pleased to congratulate the force in my hon. Friend's area on significant operations with significant results. So far in 2004–05, Derbyshire police and prosecutors have obtained 63 confiscation orders with a total value of more than £2 million, and five cash forfeitures with a total value of more than £154,000, so I congratulate them on their success. My hon. Friend is right—it is about the agencies working together. From next year, all agencies involved in asset recovery will benefit from a new incentive scheme—50 per cent. of all the money recovered will be handed back to police and other agencies as a further incentive to recoup even more. We must make sure that we convict people and take away the profits of crime so that they cannot use them to fund their lifestyle or reinvest them in their criminal activities.

Julian Brazier: Does the Minister accept that a joined-up approach must include an examination of the demand side of the equation? The reclassification of cannabis has not helped, and the shortage of places for people with dual diagnosis—young people with drug problems and mental health problems—is lamentable. What is the Minister doing to address the demand side?

Caroline Flint: I know that the hon. Gentleman is sincere, but unfortunately he has got the facts wrong, and as long as people keep distorting the facts, we cannot form a clear picture of how to handle the matter. Cannabis use among 16 to 24-year-olds has fallen since 1998 from 28.2 per cent. to 24.8 per cent; the level of use of other drugs is stable, and we need to deal with that. We must ensure that we have not only the will but the resources to tackle traffickers, and the issues around supply and demand. From April, we will invest £1.5 billion to create the necessary places to treat those with dual diagnosis. Around 1,500 offenders a month are currently entering treatment, which is a 54 per cent. increase on previous years.

Tam Dalyell: Does the Home Office recollect that it has had a good deal of evidence from Inter-Parliamentary Union delegations, such as those that I led to Bolivia and Peru and others, and from some of my hon. Friends who have been to Afghanistan, about the difficulties caused by money laundering? People in such countries say, "You western Europeans had better do something about money laundering in the Turks and Caicos Islands, the Cayman Islands, the Channel Islands and heaven knows where."

Caroline Flint: My hon. Friend has raised an important issue. Last week I was in Bulgaria and Romania, where I discussed issues related to organised crime such as drug trafficking and people trafficking. My hon. Friend's question highlights how criminals launder money from their criminal activities through financial institutions or by purchasing property or land. Whether it be on a global level or through our influence in the European Union, we should encourage countries such as Bulgaria and Romania, which want to join the European Union, to make sure that their systems include effective legislation on money laundering. I congratulate Bulgaria on recently passing its asset recovery legislation, which follows the path set by the United States, the UK and Ireland.

Angela Watkinson: In Upminster, two separate shootings have occurred in the past week, and the police suspect that both of them relate to drug turf wars. Will the Minister reflect on that fact, and then will she reflect on the following: gun crime has doubled, this country is now known as the drug capital of Europe, and this Government's drug policy has been an abject failure?

Caroline Flint: Gun crime is very low in this country. It has increased in recent years, but the rate of increase has gone down, and the number of fatalities caused by handguns has decreased considerably—[Interruption.] There has been an increase in incidents involving imitations. The use of weapons by drug gangs raises some issues, which is why we launched Operation Crackdown this year. We have made sure that not only are drugs seized and drug dealers arrested, but firearms are taken away. For the hon. Lady's information, in the first four weeks of Operation Crackdown, the 33 forces taking part arrested nearly 1,000 people for class A drug supply, closed 42 crack houses and seized nearly £1 million in suspected drug cash, 71 firearms and 86 replicas. We are taking a joined-up approach to that serious matter and, although we are not complacent, we are making progress.

Community Policing

Nick Palmer: If he will take steps to introduce a policing career structure specialising in community policing.

Fiona Mactaggart: We are in discussion with the police service about the development of career pathways for police and police staff, including community support officers. It is important that officers who remain in front-line neighbourhood policing are valued and have a clear career structure that reflects their commitment.

Nick Palmer: I am grateful for my hon. Friend's reply. In teaching, when the best teachers used to be promoted to department head they no longer did any direct teaching. The position is similar in community policing, because the best community support officers become beat officers and the best beat officers become detectives, so we lose that base of expertise in the community. Will the Minister consider creating the police equivalent of the super-teachers who dealt with the educational problem? We would then have community policing specialists, and officers would feel that such policing was a long-term career, for which they would be rewarded if they stayed in the community.

Fiona Mactaggart: My hon. Friend is right to highlight the issue. We want to ensure that, in the words of Lord Scarman 25 years ago, beat officers should be seen
	"not as occupying the bottom of the police pecking order . . . but at its apex, in the forefront of the police team".
	The development of a career pathway has been made more   achievable through the development of teams of community support officers, which gives neighbourhood police sergeants and constables the chance to lead a team. Those are some of the ways in which we are developing a career pathway at neighbourhood level. I know that that is much wanted in my hon. Friend's constituency, because that is what I was told when I met a group of community support officers in Broxtowe last year.

Anne McIntosh: How can a county such as North Yorkshire fund a structure for community policing when we are so heavily dependent on targeted grant funding? If that aspect were removed, there would be an extra £1.25 million in the police precept each year.

Fiona Mactaggart: I know that my right hon. Friend the Home Secretary has visited the hon. Lady's police authority and discussed the matter with the chief constable. The main issue concerning funding of our police service is that on police funding, the Labour party does what it says on the tin. We have increased the number of police officers on the streets to 140,000. The former Prime Minister from the hon. Lady's party promised in October 1995 that he had found the resources over the following three years to put not 500, but an 5,000 extra police officers on the beat—yet what   he actually did was cut the police service by almost 500.

Lawrie Quinn: To the list of colleagues on the Government Front Bench who recently visited North Yorkshire may I add my hon. Friend the Minister for Crime Reduction, Policing and Community Safety? During her visit she saw community policing successfully deployed in North Yorkshire. I do not recognise the comments made by the hon. Member for Vale of York (Miss McIntosh) about the county. The core of the matter is to work closely with the community, so will the hon. Lady listen closely to the great messages that my hon. Friend will be able to play into the process, and into the Home Office, to help build a proper community support officer structure in the police force nationally?

Fiona Mactaggart: It certainly can be done. Within our current promotion and retention strategies, there is an opportunity to provide special priority payments and other mechanisms to enable police officers to stay in the front line in the community. North Wales police authority and Devon and Cornwall police authority have already used those structures to enable officers who are committed to being in the front line in the community for two or three years to receive additional payments in recognition of their work.

Mark Francois: A vital component of community policing is the special constabulary which provides important reinforcement for regular officers. Special constables also need an effective career structure. Will the Minister tell the House how many special constables were serving in 1997 and how many are serving now?

Fiona Mactaggart: The hon. Gentleman is right to celebrate the fantastic job that special constables can do. I was proud to be part of a team giving awards to specials who had gone far in the course of their commitment to the police service, and I am pleased to announce that this year the number of specials has increased. I am also confident that in this year of the volunteer, their number will continue to increase. We will focus on the contribution made by volunteers in the justice system in the year of the volunteer in a couple of months, and that will give us a chance to build on and accelerate the progress that we are making in special recruitment. The hon. Gentleman and I share the ambition to use the talents of people who will commit their time voluntarily to our policing and work side by side with professional police officers.

Ian Lucas: North Wales police have introduced a scheme whereby community beat managers commit themselves to a three-year term in a particular area of the town. As a consequence, Sergeant Darren Jacks and his team in the Caia Park area of Wrexham have achieved a huge increase in confidence in policing in the area. Will the Minister commend Sergeant Jacks and his team on that work and encourage other police authorities to look at the North Wales experience, because real community policing has a huge beneficial effect on confidence in policing in communities?

Fiona Mactaggart: In an earlier reply, I mentioned that the North Wales police service had introduced special priority payments. The example that my hon. Friend mentions is important, because Caia Park is a difficult place to police. However, fantastic strides have been made by using the present career structure imaginatively and intelligently. The special priority payments have been used to encourage officers to commit to the front-line role and achieve the ambition that Lord Scarman described of putting the neighbourhood police officer at the apex of our policing strategy.

Drugs

Bill Wiggin: if he will reassess the merits of the private Member's Bill of the hon. Member for Ribble Valley (Mr. Evans).

Charles Clarke: The Government opposed that private Member's Bill because its proposed measures are already available, so its three provisions are redundant. The Drugs Bill contains further provisions to strengthen the law against drug dealers, while aiming to offer prompt and effective treatment to all who need it. I hope that all Opposition parties will assist it in its passage through Parliament.

Bill Wiggin: I am grateful for that answer, but it is a shame that Marjorie Wallace, the chief executive of the mental health charity SANE, commented:
	"We would urge the Government to reverse its decision on classification, backing that with a multi-million pound education and awareness campaign on the dangers of cannabis for young people who are developing."
	I hope that the Home Secretary will do that.

Charles Clarke: I understand the point made by the hon. Gentleman, but it was not addressed in the private Member's Bill to which he referred. That Bill suggested that the Government set up a commission to examine the effects and classification of cannabis. Such a commission already exists. It is a statutory body that reviews the harm caused by drugs and it is called the Advisory Council on the Misuse of Drugs. That professional, statutory body considered the classification of cannabis in March 2002 and made the recommendation for reclassification to which the hon. Gentleman refers. We do need to debate these issues, but to suggest that the decision was based on anything other than professional opinion at the time is mistaken.

Nigel Evans: The United Nations figures show that the amount of heroin flooding into this country has increased. We have the third largest number of heroin users in Europe and the price has come down dramatically. The Home Secretary says that we have the powers on the statute book, but is he surprised that so few people have been given the mandatory seven-year sentence for being persistent class A drug offenders? Can he assure the House, and the country, that during the general election we will not hear anything about the Government being tough on crime and tough on the causes of crime?

Charles Clarke: First, it is good that more drugs, in particular heroin, have been seized. Secondly, on the question of drug dealers, I remind the House that in 1994, 30 per cent. of dealers received custodial sentences of more than two years. Now, 66 per cent. of such offenders receive a sentence of at least two years, and the proportion getting five years or more has doubled. There has been a dramatic increase both in the numbers of drug dealers who get custodial sentences and in the time to which they are sentenced. That is a substantial contrast with what the Opposition did during their time in government. I agree with the hon. Gentleman that it would be as well to judge such matters on the facts—such as those that I have just described.

Cheryl Gillan: During proceedings on the Drugs (Sentencing and Commission of Inquiry) Bill, the Under-Secretary of State for the Home Department, the hon. Member for Slough (Fiona Mactaggart) told us that arrest for cannabis possession had been cut by a third over the past year. During that time prices have dropped to their lowest level, the market is flooded, increasing evidence is showing the damaging effects on health, and more and more children are thinking that it is safe to try cannabis. When he was a junior Home Office Minister, the Home Secretary himself admitted in a written answer that
	"most users of class A drugs, such as heroin and cocaine, started off by using . . . cannabis".—[Official Report, 31 October 2000; Vol. 355; c. 430W.]
	When will he reassess the disastrous reclassification of cannabis and put the police back to work on stopping the spread of the drug that is the foundation stone of the drugs problem—or has he changed his mind?

Charles Clarke: I welcome that question, from this point of view: I want to make it absolutely clear that nothing justifies the consumption of cannabis by young people or anybody else. All the education that we work on with the Department for Education and Skills and the teaching profession makes that clear. The reason for making such intelligence available is to make it clear that the consumption of cannabis is wrong, illegal and a mistake. Of course the hon. Lady is right to say that it is necessary to continue to prosecute that argument, and we will do so, but she should not seek to mislead in her description of the situation.

Stop Forms

Mark Prisk: When he next expects to meet representatives of police forces to discuss the implementation of stop forms.

Hazel Blears: Ministers have regular meetings with the Association of Chief Police Officers and other police representatives at which the recording of "stops" issues are discussed. We set up a stop and search action team to ensure that the police use their powers of stop and search fairly and as effectively as possible. The team has been working with both community representatives and police organisations through the independent community panel.

Mark Prisk: Antisocial behaviour in Hertford and Bishop's Stortford is a serious issue, and the power of the police to stop youths engaged in it plays a crucial part in tackling the problem. It can take up to an hour for a policeman to stop a gang of youths, which is often at the heart of the issue. That is a real worry to our police officers. Does the Minister not realise how demoralising it can be for them to be caught in the dilemma of whether to spend an hour filling in forms or to spend it out on the streets making our communities safer?

Hazel Blears: I do not know whether the hon. Gentleman has been out with his police officers—but I am sure that he has. All the evidence that we have shows that the vast majority of stops take less than five minutes to record; the longest time that it took to record any stop was 10 minutes. As he will be aware, not every encounter requires the recording of a stop, and there are now some practical examples in our stop and search manual. Conversations concerning, for example, general background or looking for witnesses do not fall within the definition of stops that need to be recorded. The definition of a stop that needs to be recorded is when a police officer asks someone to account for their activity, which is not necessary in the vast majority of cases involving the tackling of antisocial behaviour. As I am sure that the hon. Gentleman will acknowledge, we now have a far wider range of powers to tackle antisocial behaviour, including fixed penalty notices and dispersal orders. Those are all tools that the police are finding incredibly useful.

Prison Estate

Peter Bottomley: What plans he has to ensure that the prison estate is able to accommodate the projected future prison population.

Paul Goggins: Since 1997, the Government have increased the number of prison places by around 17,000 to the current usable operational capacity of 76,600. We plan to increase that by a further 3,800 places to around 80,400 by 2007.

Peter Bottomley: Is it not surprising that all these places are needed? Can the Minister check whether 2,400 people a week are still collecting for the first time a serious criminal conviction leading to jail for six months or more? Has he tried to cut the amount of crime and to get out of the prison system those who are mentally troubled and should not be there anyway?

Paul Goggins: Of course all our efforts should go into trying to prevent crime and reduce the number of crimes, and we are being effective in that. If the hon. Gentleman is making a plea for a more balanced approach to sentencing, whereby prison is reserved for the serious and dangerous offender, and less dangerous offenders are given robust community sentences or fined, I join him in arguing for such a rebalancing of the system. Indeed, the Government are doing that. We want prison to be reserved for the serious and the dangerous, while others should serve robust community sentences.

Brian Jenkins: Does my hon. Friend feel as disappointed as me that we are discussing increasing the size of prisons to hold that projected population? Will he try to establish how many people remain in prison who were for release under the care in the community programme but had nowhere else to go? How many people who are in prison belong in secure hospitals? Instead of providing extra places, will he divert some of the money to the good prison programmes to prevent the 60 per cent. who reoffend from doing so? All we are doing is re-churning prisoners in our prison system.

Paul Goggins: I thank my hon. Friend for this thoughtful remarks. Nobody should be in prison because they have a mental health problem, but clearly there are people in our prisons who suffer such problems: we estimate that on any one day there are about 5,000 people who suffer from a serious mental health condition. That is why we have invested in the in-reach project, and 300 additional psychiatric nurses are working in our prisons. Last year more than 700 people were transferred from prison to secure hospital because of their mental health needs. Of course we need to get the balance right, but when people have mental health problems, we seek to address them.

Crime (Animals)

Norman Baker: What guidance he issues to chief constables in respect of recording crime involving animals.

Hazel Blears: The Home Office issues general guidance on counting and classifying the offences that are included in the recorded crime statistics. Wildlife crimes are generally summary offences and are therefore not included. However, there is a category for wildlife crime in the new national standard for incident recording that is currently being developed.

Norman Baker: We need to know the exact extent of wildlife crime. Does the Minister accept that for many people, wildlife crime is important, and that in their view, the police do not give sufficient attention to disgusting practices such as badger baiting and hare coursing? Will she encourage chief constables to nominate a dedicated wildlife liaison officer? Will she also ensure that the police national computer registers offences detected not only by the police but by the Royal Society for the Prevention of Cruelty to Animals?

Hazel Blears: The hon. Gentleman is right that wildlife crime is important and that many people are worried about badger baiting and the sorts of terrible crime that every hon. Member would want to condemn. However, it is an operational matter for police forces to decide their priorities. I should like to place on record my thanks to Mr. Richard Brunstrom, the chief constable of North Wales, who is the leading wildlife officer for the Association of Chief Police Officers and is doing excellent work on the matter. Many forces have dedicated wildlife officers, and that is why we are keen to develop the incident recording system, which will enable us to keep a closer track on the sort of crimes that occur. Whether they are recordable depends on the sorts of punishment that are available. As I said, most are summary only offences and would not necessarily be recordable, but the incident recording system should enable us to keep better track of them.

Burglaries

John Denham: What estimate he has made of the number of burglaries in 2004 and 2005 to date; and if he will make a statement.

Caroline Flint: Figures for 2004–05 are not yet available. The most recent annual British crime survey data, which were published in July 2004, showed a 42 per cent. reduction in domestic burglary from 1997. The quarterly statistical update, which was published in January, reported that the number of domestic burglaries recorded by the police fell by 23 per cent. in the 12 months to September 2004.

John Denham: I welcome those figures. On a constituency note, will my hon. Friend join me in congratulating Southampton police? Burglary figures for the past seven months were 36 per cent. below those for the previous seven months. That is a significant achievement. What is being done centrally to ensure that the lessons of good and effective policing practice, such as that in Southampton in the past six to seven months, are learned and shared in other parts of the country?

Caroline Flint: I congratulate my right hon. Friend's police force on its success. As he knows, from 1999 to 2002 we had the reducing burglary initiative, whereby 63 projects examined what worked and what was value for money. He is right to say that we need to spread good practice, and we are doing that by providing information that is accessible to all police forces and others in the community on our website and through seminars. We can work on many different fronts in policing, reducing crime and targeting especially vulnerable groups such as older people and students. We are making progress on all those matters. Overall, it is pleasing that the number of burglaries, recorded or otherwise, is down.

Patrick Mercer: The Minister will be aware that when I tried to introduce the Criminal Law (Amendment) (Householder Protection) Bill, a number of very senior police officers supported it, saying that it would deter burglary. Furthermore, convicted criminals, including the now infamous Brendan Fearon, said that it would have deterred them. Will the Minister explain why the Government continue to support the burglar rather than the householder, by opposing my Bill?

Caroline Flint: We certainly do not support the burglar. That is emphasised by the fact that the number of burglaries has gone down. We are getting a clear message across to the people who would enter our homes to steal from us that they will be caught and dealt with. We have looked at improvements in this area, including introducing a minimum sentence of three years for those convicted of domestic burglary for a third time. The reason why we did not support the hon. Gentleman's Bill is very simple: it became clear, after consultation with a wide group of people, that what was needed was to ensure that people understood the law as it stood. That goes both for the public and for the burglars.

Orders of the Day
	 — 
	Income Tax (Trading and Other Income) Bill

Motion made and question put forthwith, pursuant to Standing Order No. 60(8),
	That the Committee of the whole House be discharged from considering the Bill.—[Mr. Heppell.]
	Question agreed to.
	Order for Third Reading read.

John Healey: I beg to move, That the Bill be now read the Third time.
	I am pleased to open this debate on the Bill, which rewrites our legislation on the taxation of trading, property, and savings and investment income. The Bill has been produced by the Inland Revenue tax law rewrite project, which is a long-term undertaking to rewrite our direct tax legislation so that it is clearer and easier to use. This is the second rewrite Bill to venture into the realms of income tax and it does so in a significant way, by tackling schedules A, D and F in the current legislation. About 20 million people receive income of one variety or another that is taxable under these schedules.
	Before I say more about the specifics of the Bill, it might be appropriate to remind the House of the work of the tax law rewrite project. The project was set up in 1996 by the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke). It is a project to rewrite the UK direct tax code, the provisions of which have been enacted over at least the past two centuries. The principal aim of the project is that the rewritten legislation should be accepted by all the main users as clearer and easier to use. While making the legislation more accessible, the project also takes great care to preserve the effect of the present legislation, apart from minor agreed changes, and it proceeds through careful consultation and consensus. It is beyond the remit of the project to make any change in the main tax policies. However, the rewrite can encompass minor changes where they will improve the legislation. Examples of such changes are the inclusion of extra-statutory concessions, the repeal of obsolete material and the correction of small anomalies. The explanatory notes list 159 such changes in the Bill.
	In its consideration of the Bill, the Joint Committee focused in particular on the minor changes and satisfied itself, and reported to the House, that they were all within the remit of the project. It also heard that the project had dropped any proposed changes that did not meet the approval of its two external committees. The Joint Committee noted the widespread public scrutiny of the Bill as a whole, and of the minor changes in particular, which were flagged up very clearly at each stage in the consultation process.
	In the run-up to the Bill, 18 separate consultation papers were published, and the Bill was published in draft form last March. All were published for public consultation. In addition, a response document summarising the comments made on the draft Bill and setting out how the project has taken account of them was issued last September.
	Of course, consultation does not stop with formal papers. The project continues to consider other ways to involve users of tax legislation and keep them informed so, over the last two years, the project has made much more use of its website to publish work in progress in the form of early drafts or changes to previously published work.
	It may be helpful if I say a few words about the content and approach of the Bill, which is the third of the tax law rewrite project. The charge to income tax is broken down into a number of schedules. Over the years, schedules have come and gone, but currently we have schedules A, D, and F. The Bill tackles income tax charged under those schedules. It brings the charging and calculation rules for the different sorts of income together in updated classifications, such as trading income, savings and investment income, and property income. Unlike current legislation, it integrates foreign income in the same parts as equivalent United Kingdom income, confining any special rules that apply to foreign income to a different part.
	The Bill applies for income tax only. The project consulted at an early stage on whether to aim for separation of the income tax code from the corporation tax code. Users of the legislation favour making this separation, so where the legislation rewritten in this Bill currently applies to both codes, the current provisions will be repealed for income tax purposes, but will continue to apply for corporation tax.
	The Joint Committee heard that this Bill is the first step in the separation of the income and corporation tax codes. The project will consult further on the extent to which corporation tax provisions should be rewritten in full or should cross-refer to income tax Acts.
	Various techniques have been used in the Bill to make the legislation clearer and more accessible. The first and most important element is the imposition of a coherent structure. Instead of the haphazard order of provisions in the existing legislation, the Bill presents all the material in a logical way, with linked topics grouped together.
	The Bill also contains plenty of aids to the reader, such as introductory scene-setting chapters and signposts to other relevant provisions. These are designed to help readers to find their way through what is, inevitably, a large body of legislation. Other features of the rewrite process include shorter sentences, modern language, more consistent definitions and greater use of other reader aids such as formulae, tables and method statements. All this combines to make a new style of tax law that is more accessible and altogether more user-friendly.
	The project continues to enjoy the strong support of users of the legislation and I am also happy to say that it continues to command strong support from both sides of the House. I pay tribute to Members of the House and of the other place who have played a part in the scrutiny of the provisions to date. The comments made by the representative bodies confirm that this latest Bill from the project has indeed been well received. The Institute of Chartered Accountants in England and Wales said that the Bill, as published in draft last spring,
	"is well constructed and we commend its drafting. It covers important ground and . . . facilitates taxpayers' easier understanding of legislation which will affect very many of them, it is a useful addition to the rewritten legislation."
	The Chartered Institute of Taxation said:
	"we recognise and commend the huge amount of detailed work that has gone into the production of this Bill . . . please extend our congratulations to the entire Project for what is on balance a mammoth and an excellent product."
	To sum up, this is an immensely worthwhile project that modernises our direct tax legislation, making it clearer and easier to use. This, the second income tax Bill, is another major milestone in the work of the tax law rewrite project. Work remains to be done to complete the rewrite of income tax, but the Bill is a demonstration of significant further progress and it maintains the project's excellent track record on improving current legislation. I commend it to the House.

George Osborne: As I said on Second Reading, the Conservative party very much welcomes the latest product of the tax law rewrite project, which, as the Economic Secretary said, was set up by the previous Conservative Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). Anything that reduces the impact of the taxes that we impose on taxpayers, certainly in a regulatory sense, is welcome.
	I cannot resist welcoming the Liberal Democrat presence, as it was completely absent from Second Reading, as the Minister might remember, which is strange given that the Liberal Democrats are particularly fond of income tax and want to increase the top rate, introduce a regional income tax, local income tax and so on. Under the Liberal Democrats, we would therefore have a lot more tax and a lot less income. Nevertheless, I welcome the hon. Member for Twickenham (Dr. Cable) to his place for Third Reading.
	The Economic Secretary mentioned in his short speech the history of income tax and that it was set up at the end of the 18th century to pay for the war with France. At the time, it provoked an outcry in the House of Commons. Charles James Fox, no doubt speaking from this side of the House at the time, said that income tax
	"tends to the immediate destruction of"
	taxpayers'
	"trade, the annihilation of their fortunes, and possibly to the loss of liberty of their persons".
	William Pitt had personally designed the new tax system in his combined role of Prime Minister and Chancellor—an arrangement that I am sure that the current Prime Minister would look on with envy—to stabilise the country's finances. I wonder what would happen were Fox and Pitt to glimpse our proceedings today in this near-empty Chamber as we remove from the statute books what remains of the schedule structure of the Income Tax Act of 1803. We are witnessing a little bit of history. As someone who studied history at university, I think it is worth mentioning that.
	Of course, the Bill also separates income tax and corporation tax law for the first time since corporation tax was introduced in 1965. That will have a significant impact on 20 million taxpayers, 5.7 million recipients of tax credits and 47,900 tax practitioners, as well as on the £22 billion of revenue collected by the taxes represented in this legislation. The fact that we can pass this Bill, with its 886 clauses, with some confidence that it only makes our direct tax law simpler, more consistent and easier to use, and is not being used as a stealthy tax-raising measure, is down entirely to the heroic work of the three committees that oversee the rewrite project mentioned by the Economic Secretary.
	The first of those is the Joint Committee of both Houses, which scrutinises the Bill to make sure that the letter but not the spirit of the law is being rewritten. Like the Economic Secretary, I pay tribute to my right hon. and learned Friend the Member for Rushcliffe for chairing that Committee. It is appropriate that he stays involved, as the Chancellor who established the tax law rewrite project nine years ago. When it met last month, the Committee concluded that it was satisfied that
	"the only changes that the Bill makes to the existing law are of such minor significance that they need not be referred to the attention of Parliament."
	I am grateful for its work. I have read the proceedings and it is clear that it grilled the officials involved. Clearly, while I suspect that the Chancellor of the Exchequer is desperate to increase income tax revenues to fill his black hole, this Bill will not be his way of doing it.
	Another important check on the process is the steering committee. I pay tribute to another former Chancellor, who chairs it—Lord Howe of Aberavon, who also sits on the Joint Committee. Lord Howe is a driving force behind the tax law rewrite project, and the Economic Secretary and I can attest to his personal interest in the Committee proceedings, as he sat in the public seats upstairs to listen to us, which is probably the first time that a former Chancellor has done so. His presence was very welcome.
	I also thank my right hon. Friend the Member for Fylde (Mr. Jack) for his work on the steering committee. As I said on Second Reading, the whole project seems to be aimed at establishing a retirement home for former Treasury Ministers. I repeat my offer to appoint the Economic Secretary to it on 6 May.

Chris Bryant: Guffaws of laughter.

George Osborne: No doubt the hon. Gentleman is looking forward to his own lengthy contribution to the debate. I am sorry that he has moved back to his usual place in the Chamber, because I thought for a second that he had been promoted to the post of the Minister's Parliamentary Private Secretary—that he had finally reached the first rung of the ladder—but, sadly, he seems to have fallen to the ground. I think that I have advised him before to make more helpful interventions on Ministers' speeches if he wants to get on in life.
	I also thank the consultative committee: representatives of lawyers, accountants and other tax practitioners and, indeed, representatives of taxpayers such as the Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses and the London chamber of commerce. Theirs is detailed work. Those representatives are in the front line in dealing with the complexity and obscurity of tax laws that we pass here and I thank them for their help in trying to make legislation clearer and simpler.
	Let me now deal with the substance of the Bill and specific issues. If the Minister does not wish to intervene, perhaps he will write to me if he thinks he could respond to any points that I raise.
	The Minister mentioned the integration of foreign with United Kingdom income tax rules. That is, I think, one of the most welcome features of the Bill. Perhaps the Minister will now consider introducing a single tax form for foreign and UK income. A question was asked about that in the Joint Committee. I know that it is beyond the remit of the rewriting team, but it is very much within the Minister's remit. It might be of practical benefit to the whole rewriting process if people could fill in just one form.
	Clause 882, which was also discussed in the Joint Committee, gives the Treasury power to alter the legislation by an order that is subject only to a negative resolution, rather than the affirmative procedure that we would expect. The issue was also considered by the Delegated Powers and Regulatory Reform Committee in the House of Lords. I understand why the power is necessary—technical changes may be needed to correct any mistakes or omissions in this complex legislation—but will the Minister now repeat his assurance to the Joint Committee that he, or other Treasury Ministers, would make such orders only after securing the agreement of the consultative and steering committees? That is, I feel, an important check.
	Appendix 4 of the memorandum submitted by the Inland Revenue to the Joint Committee indicated that there were some extra-statutory concessions that had not been written, or rewritten, into the legislation. The reason given by the Revenue was that they were too complex. They include fairly important matters such as directors' fees, the profits and losses of theatre backers, compensation for the compulsory slaughter of farm animals, and wear and tear on furniture and the like in furnished lettings.
	I know that the tax law rewrite team gave detailed consideration to what might be done in those areas, but decided that it could not make any great improvement—or that it was not worth trying to do so. Is the Minister satisfied with that conclusion? It seems a shame to leave some particularly complex parts of the law unrewritten just because they are particularly complex. Perhaps once the whole body of direct taxation has been rewritten, the rewrite team will look again at the bits that they have had to leave out. I know that there will only be a few, but it would be a shame just to leave them standing there, unrewritten.
	Other clauses affect the tax paid by individuals, both in theory and in practice. The Joint Committee looked in depth at the 43 changes that may lead to the payment of less or, indeed, more tax by an individual. Examples include clause 412, on stock dividends, clause 150, on securities held as circulating capital, and clause 666—a rather inauspiciously numbered clause—on beneficiaries' income from estates in administration. The Joint Committee satisfied itself that the changes are sufficiently obscure as to be very unlikely to have a significant impact and I am sure that it is right. However, as tax law develops and as the courts and the Revenue interpret it, one would not want individuals to end up paying more tax as a result of a rewrite. I hope that the Minister will assure me that, despite the Joint Committee's having satisfied itself on this matter, the Treasury will continue to keep an eye on it as the various rewrite laws bed in and new tax practice develops around them. We do not want taxpayers to pay an unfortunate price for what should be a very welcome process.
	I turn now to an issue that I raised on Second Reading, but which is worth airing again on Third Reading. The valuable work done through this process by the tax rewrite team will be completely pointless if it is to be undermined by subsequent legislation that is poorly drafted or inconsistent with the rewritten law's language, and which returns us to the very morass that the rewrite project is supposed to address. This is, as the Minister well knows, a real threat, because it has already happened. Large parts of the Income Tax (Earnings and Pensions) Act 2003 were superseded just a couple of months later by schedule 22 of that year's Finance Act, which was hideously complex, used language inconsistent with the rewritten tax law and, indeed, undermined the whole purpose of the rewrite project. That is not just my view but that of the Inland Revenue itself. Indeed, its "Tax Law Rewrite: Plans for 2004/05" address this very point, saying:
	"One issue which gave rise to a considerable amount of comment and discussion during 2003–04 was raised by Schedule 22 to the Finance Act 2003 . . . Critics argued that the style and format of Schedule 22 compared unfavourably with the quality of legislation produced by the project; and that it was highly unfortunate that a substantial part of the second Tax Law Rewrite Act had to be replaced so quickly by new legislation that was perceived to be of lower quality . . . The topic received considerable public airing. It was also discussed on several occasions by the project's Committees . . . this is an issue that will no doubt stay with us—to some degree—and on which we must continue to work. It will be a priority in 2004–05 to keep this issue in front of us and to promote further discussion about how best to tackle it."
	I have quoted that passage at length because it is very important and it gets to the heart of the issue, which is whether this process is simply temporary or will bring about a real change in the way in which we produce tax law.
	When I raised this issue on Second Reading, the Minister conceded that I had made a fair point. He said that the Government were learning lessons from the debate and from the criticisms that were received of schedule 22. His excuse was that it is difficult to produce good-looking legislation when it needs to be produced to tackle such problems in a fairly short time and under pressure. Of course, he is right, in that parts of the Finance Bill are often produced in that way in order to deal with what the Government of the day would describe as "tax-avoidance schemes". But given that that is a normal process in Finance Bills, the Minister must surely look at a way of ingraining into the team currently writing tax law some of the principles and language used by the rewrite team. Otherwise, we will shortly find that—under perhaps Governments of either persuasion—much of the rewrite team's good work is undermined as bits of the tax law are superseded by hastily and poorly drafted new tax legislation. I ask the Minister to look again into that matter and see what can be done. The Inland Revenue said that it wanted to promote further discussion on how best to tackle the problem in 2004–05 and time is rapidly running out, so this is probably my last opportunity to make the point.

Geoffrey Clifton-Brown: Does my hon. Friend accept that some of the most byzantine legislation emanates from Europe, and will he urge our European colleagues to reflect further on the lessons that we have learned from our tax rewrite system here to see if they can improve their legislation by writing it in that format? [Interruption.]

George Osborne: My hon. Friend makes an excellent suggestion. The hon. Member for Rhondda (Chris Bryant) made the point that "Byzantine" does not relate to Europe, but one hopes that, with the Turkish accession, it soon will. The EU, which is now the source of an enormous amount of financial regulation, if not yet tax law, should certainly learn the lessons from our rewrite project, which has been a model of how to produce clear and consistent language. If those in Brussels pay any attention to what is going on in national Parliaments, I hope that they have heard my hon. Friend's point.
	The Bill reinforces the determination of Conservative Members—I hope that it is reciprocated on the Government side—to ensure that the rewrite project continues—and continues to be properly funded. As I understand it, it has completed only about a third of its scheduled work and there is at least one more income tax Bill to come, before the team moves on to capital and corporation taxes. I can certainly give a commitment today that a future Conservative Government would ensure that it received all the support that it needed.
	We would like the process to go even further and build on the work of the rewrite project by promoting tax simplification—[Interruption.] I see that that commands broad support on this side of the House. We believe that the UK tax system has become over-complicated and changes too frequently. It is riddled with inconsistencies, complexities and obsolete provisions and those inconsistencies impose a considerable burden on taxpayers and businesses, adding to the costs of complying with tax law. They also add to costs of the Inland Revenue and have led to a huge growth in demand for tax services in the past few years.
	We have examined the proposals put forward by Lord Howe himself in his Hardman memorial lecture of 2000 and, indeed, the recommendations of the working party that Sir Alan Budd chaired for the Institute for Fiscal Studies. When we are elected to government, we would wish to proceed along the lines recommended and establish a simplification project to run in parallel with the rewrite project. We would also introduce a tax structure review programme to look into the existing primary direct and indirect tax legislation, which would identify measures to be modified, approved or abandoned. We would hope that, just as with the rewrite project embodied in the Bill today, the tax simplification project would command broad support throughout the House. It would follow in its structure many of the structures in the tax rewrite system and we shall shortly publish details of exactly how we wish to proceed.
	Tax law has become more complex and I applaud the efforts to rewrite it in consistent and clear language, but we now need to take a further step to make the substance of our tax system altogether simpler and fairer for those who pay it. Having said that, I greatly welcome the Bill before the House today and wish it a speedy passage.

Vincent Cable: May I add my support for what seems an eminently sensible and uncontroversial piece of legislation? I congratulate those who worked on the tax rewrite project and helped to produce the Bill before us.
	Perhaps I should also congratulate the hon. Member for Tatton (Mr. Osborne) on managing to spin out to 20 minutes his contribution to a debate on legislation that we all agree is necessary and almost entirely devoid of controversial policy. He helped to fill in a couple of minutes of his contribution by referring to the Liberal Democrats' enthusiasm for income tax. I did not come here today to engage in party political banter, but I should be happy to respond to the point that the hon. Gentleman made. It is certainly true that one of our policies—our only tax-raising policy—is to increase the rate of taxation on earnings above £100,000 a year. We also propose that there should be greater reliance on the income tax mechanism by exchanging the council tax system for one based on local income tax. One consequence of working through the existing mechanisms of the Inland Revenue would be to show that there was less tax bureaucracy, because there would be no need for council tax benefit systems or valuation systems. We would thus be freeing up resources for more productive purposes. The hon. Gentleman is right in one sense: we are placing more reliance on income tax as a tax mechanism, rather than raising taxes.

George Osborne: The hon. Gentleman's party claims to be the real Opposition. Does he think that real Oppositions should turn up to Second Readings of important legislation?

Vincent Cable: This is important legislation and we are here to respond and agree to it.

George Osborne: What about Second Reading?

Vincent Cable: I am sure that I can give the hon. Gentleman an explanation. We all agree that the Bill is useful; it does not affect the course of parliamentary business. There are much more important issues when we do need to be in the Chamber and when we make an effective contribution.
	At the end of the hon. Gentleman's speech, he made the entirely valid point that the fundamental problem is the extreme complexity of the tax system. Most of the complexity is not in the income tax field, but relates to capital gains tax and business taxes, where there is a case for major simplification. There are complexities in the income tax regime, however, and the measure will help with those.
	On a personal level, I should like to mention a couple of points on which the legislation is helpful. Until recently, I had little experience of farming, but as I have just married a farmer I have come to appreciate some of the difficulties that many farmers face when dealing not only with the absurd bureaucracy of the Department for Environment, Food and Rural Affairs but also with tax complexities. The sale of a few bales of hay or the temporary renting out of a field to a neighbour for pasture cause enormously complex tax problems. The attention that the Bill devotes to clarifying what trading income means will, I hope, make farmers' lives a little easier.
	Another interesting example from the legislation relates to the rent-a-room provisions. The idea that to deal with homelessness one might encourage house owners and householders to let out a room and get some tax relief was useful and sensible, and we should make more use of it. However, the problems presented by the legislation are exemplified by the 20 pages of the Bill devoted to explaining how the various provisions and reliefs are applied. Anything that the legislation can do to clarify those matters will be much appreciated.
	The key point, at which the Conservative spokesman hinted, is that the way to deal with both the difficulties of tax language and the complexity of the provisions is for as many people as possible to be lifted out of tax altogether. Last week, we made a small contribution to that through our proposals on stamp duty. Millions of people are on low incomes—pensioners and low-paid workers—and pay income tax, so it would be desirable to lift the threshold for them. We know how difficult that is, because lifting thresholds is expensive; or, if they are tapered, they create higher marginal tax rates. None the less, that is an important strategic objective.
	In the meantime, as elderly, frail and poor pensioners often pay income tax, it is important to focus on the specific problems and to give them help through the Inland Revenue to complete the forms and deal with the complexities involved. That is still relevant despite the language improvements in the measure.
	I am neither a tax lawyer nor a professor of linguistics, so I have nothing of great substance to contribute to the debate other than to welcome the Bill as a useful piece of legislation, which we support.

John Healey: There have been constructive and supportive comments from both Opposition parties. I appreciate the shadow Chief Secretary's welcome for the Bill. He described the project as a model for approaching the challenge of producing clearer, easier, more comprehensible and intelligible tax legislation. I welcome that. I am sure that the House appreciates the sense of history that the hon. Gentleman brought to the debate. Some might say, however, that he and his party are backward rather than forward looking—the party of the past still struggling to become the party of the future.
	May I tell the hon. Member for Twickenham (Dr. Cable) that, although it is not really my part to stand up for the shadow Chief Secretary, the hon. Member for Tatton (Mr. Osborne) was able to contribute to the debate for almost 20 minutes in large part because he and his colleagues have given rather more scrutiny to the content of the Bill and its progress through Parliament than the Liberal Democrats? Nevertheless, I welcome his general support for the Bill.
	I turn to three or four of the specific issues raised by the hon. Member for Tatton, although this is Third Reading. He talked about the need for a single tax form that would allow taxpayers to declare foreign and domestic sources of income. Especially under Her Majesty's Revenue and Customs, we will consider how to improve the process, particularly the forms that taxpayers must use, but a separate entry for foreign income is still likely to be needed because of double taxation relief, which is confined to foreign income.
	On clause 882, as the hon. Gentleman explained, the issue that he raised was one for the Bill's previous stages, both Second Reading and the consideration by the Joint Committee on Tax Law Rewrite Bills. The clause has been examined carefully during the Bill's progress to date and in the Joint Committee. It is designed to make technical changes. However, I am happy to confirm, as I did to the Joint Committee, that it is our intention and our undertaking to introduce regulations under that clause only with the agreement of the tax law rewrite project's steering committee.
	The hon. Gentleman believes that some issues may warrant the attention of the tax rewrite project in the future. Of course, such work is for future decision, but the project consults widely on its future work, and I am sure that it will note the hon. Gentleman's comments.
	We have discussed schedule 22 before, but the value of such tax rewrite Bills is that they make it easier to fit in changes to tax legislation, while keeping the tax legislation clear in the future. New or amending tax legislation will generally be fitted into the draft structure and the style set out in the Bill. Schedule 22 was introduced in unfortunate circumstances—they were not ideal—and in large part to deal with a severe problem of tax avoidance, but I assure the hon. Gentleman and the House that we do our best to produce a good standard of legislation in Finance Bills and to maintain the style and structure established in such tax rewrite Bills, and we will continue to do so in succeeding Finance Bills.
	The Bill is a milestone in the work of the tax law rewrite project. There is widespread and well-deserved recognition of the work of all those involved in producing this income tax rewrite Bill, but in drawing this Third Reading debate to a close, I wish to pay tribute, in particular, to Lord Howe of Aberavon, who has chaired the steering committee, and to the steering committee, which overseas the project. There are representatives from the Labour party and from the Opposition—my hon. Friend the Member for Falkirk, West (Mr. Joyce) and the right hon. Member for Fylde (Mr. Jack).
	I pay tribute to the members of the consultative committee—a crucial part of the tax law rewrite project's structure that reviews the project's work and contains leading representatives of accountancy bodies, legal bodies and representatives of taxpayers, too. I welcome the contribution that many other individuals and bodies have made to the consultations. I also pay tribute to the right hon. and learned Member for Rushcliffe (Mr. Clarke), who started the project in 1996. He has maintained his commitment to it and has recently chaired the Joint Committee, as part of the Bill's scrutiny.
	Finally, the real work—the day-to-day, week-to-week and year-to-year work—is done by the project team. Dedicated, detailed work is undertaken with great care by Inland Revenue officials, led by Robin Martin, with great distinction. I pay tribute, as many others have, to the project's work and to his leadership. This is not a tax reforming Bill, nor a tax simplifying Bill, but it is, as hon. Members on both sides of the House have said, an important Bill. It will make things easier for everyone who uses tax legislation. I commend it to the House.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed.

ESTIMATES

Motion made, and Question put forthwith, pursuant to Standing Order No. 145 (Liaison Committee),
	That this House agrees with the Report [4th March] of the Liaison Committee.—[Mr. Watson.]
	Question agreed to.

Future European Union Finances

[Relevant documents: Thirty-fourth Report of the European Scrutiny Committee, Session 2003–04, HC 42-xxxiv, paragraph 13; Seventh Report of the European Scrutiny Committee, Session 2004–05, HC 38-vii, paragraph 1; Ninth Report of the European Scrutiny Committee, Session 2004–05, HC 38-ix, paragraph 1.]

Mr. Speaker: I inform the House that I have selected the amendment in the name of Plaid Cymru and the Scottish National party.

Stephen Timms: I beg to move,
	That this House takes note of European Union documents No. 11607/04, Commission Communication: Financial Perspectives 2007–2013, No. 11741/1/04, draft Decision on the system of the European Communities' own resources and draft Regulation on the implementing measures for the correction of imbalances, No. 11745/04, draft for renewal of the Inter Institutional Agreement on budgetary discipline and improvement of the budgetary procedure, and No. 11752/04, Commission Report: Financing the European Union—operation of the own resources system; supports the Government's efforts to refocus the European Community budget towards the Union's key priorities in line with the principles of subsidiarity and European Union value added and stabilise the budget at no more than 1 per cent. of European Union Gross National Income; shares the Government's concern over proposals for new flexibility instruments; opposes the Commission's proposals for a Generalised Correction Mechanism; and in particular supports the Government's view that the Commission's overall proposals are unrealistic and unacceptable.
	I welcome the opportunity to examine the Commission's communications for the next financial perspective of 2007 to 2013, its draft proposals on the system and operation of the European Community's resources and on the implementing measures for the correction of imbalances, and its draft on the renewal of the inter-institutional agreement. Taken together, the documents outline the Commission's proposals for the policies and financial decisions that underpin negotiations on the future financing of the European Community budget. This will be the first full financial perspective for a European Union of 25 members, so we are at a significant point in the history of the EU. It is thus appropriate that the debate is taking place on the Floor of the House and at a time that will allow it to inform the negotiations that will take place in the next few weeks.
	The Government take the view that the next financial perspective is an important opportunity to increase the effectiveness and transparency of EU expenditure and to consider how allocations within a limited budget can best be applied in support of the European Union's priorities, especially the Lisbon strategy. That is why we have proposed that all budget spending be focused on objectives, with an emphasis on policy outcomes rather than simply budgetary inputs. Decisions should be based on evidence with a proper evaluation of budgetary policy. The budget should be based on a proper assessment of both existing and new areas of spending. It should be decided whether the Union is the best institution to tackle specific matters. We have proposed that there be sound financial management and budgetary discipline, and we should make sure that spending throughout the EU is distributed equitably.
	That view has put us at the forefront of calls for further reform. The budget should be stabilised at no more than 1 per cent. of European Union gross national income, or €815 billion over seven years on a commitments basis. That represents a 6.5 per cent. real-terms increase compared with the current financial perspective, and we believe that it is both realistic and affordable.

Ian Davidson: Will the Minister clarify whether the 1 per cent. limit is a firm commitment? Will the Government refuse to budge from that and give an undertaking that, if necessary, they will veto any proposals that would take Britain's contribution beyond the present level and the budget beyond 1 per cent.?

Stephen Timms: The Government are making such a firm commitment, and I am pleased that that is gathering support from other member states—six countries signed the letter containing the 1 per cent. aim. As I shall say in a moment, there is a clear indication that several other member states are moving in the direction of supporting our position on that.
	While we respect the Brussels agreement to press for a more liberalised and market-focused agricultural sector, including the reform of the sugar and dairy sectors, and support further modulation, we want to refocus the structural and cohesion funds of the lowest-income member states within an overarching framework agreed by all member states. Spending should be refocused within internal policies on a smaller number of initiatives with demonstrable added value, particularly research and development, freedom, security and justice. We also aim to improve the effectiveness of external actions in support of the EU and UK external objective—external to the EU—to which the millennium development goals are central, while retaining flexibility to cope with crises such as the tsunami if the need arises.
	The Commission has not as yet responded adequately to the challenge that those aims present. In its communications of February and July 2004, which are before the House today, the Commission proposed a total budget for 2007–13 of more than €1 trillion. That is a real-terms increase of 34 per cent. compared to the current financial perspective, with little justification being provided for such a large increase and little prioritisation between the different elements. For example, despite the fact that, with enlargement, the richest parts of the Union would become more than 10 times richer than the poorest, the Commission proposes that less than half of the structural and cohesion funds go to the new member states, where they would have the greatest effect.
	Despite our commitments at Monterey, the Commission proposes a regionally based policy approach to external actions—external to the EU—which would make it harder rather than easier to refocus the budget on low-income countries and the millennium development goals.

Adam Price: Does the Commission not propose to focus the vast majority of structural funding on the poorest regions within the EU, including poor regions within relatively prosperous member states? It proposes that the vast bulk of the funding go to the poorest regions within Europe overall.

Stephen Timms: The hon. Gentleman will recognise that there is not much value in rich EU countries swapping funding between themselves in the interests of their own regions. It makes much more sense for the Governments of the better-off countries to fund their regional development. As the hon. Gentleman knows, we have given a domestic guarantee for regional funding in the UK.
	For all these reasons, I suggest to the House that the Commission's current proposals are neither realistic nor acceptable. The proposals for increased flexibility instruments are not necessary, as they would hamper sound budget discipline. Responding to unforeseen needs is best done through reprioritising spending and agreeing appropriate budgets for each heading.
	The Commission also proposes some major changes to the financing of the EC budget, with its suggestion of a generalised correction mechanism. The intention would be to replace the UK abatement and, according to the Commission, reduce differences between net contributors at comparable levels of prosperity. That is completely unacceptable. It is neither fair nor principled. As proposed, it would widen rather than narrow the disparities between the large net contributors, and would cost the UK €5 billion a year by 2013. The proposed mechanism would also institutionalise the failure to redress the inequities on the expenditure side of the budget. Large receipts are going to countries of similar wealth to the UK, which receives the least in per capita terms. This means that the abatement remains fully justified. The continuing inefficiencies and inequities on the expenditure side of the European budget and the resulting unfairness of the UK position mean that the abatement is not up for negotiation.
	As I said to my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson), I am pleased to tell the House that, as the negotiations progress, our views on both budget discipline and reform are gaining increasing support among other member states, including the newest members. The Dutch presidency progress report to the European Council in December showed that there is widespread dissatisfaction with the Commission's proposals among member states. The documents before the House contain information on the advances achieved by the Dutch presidency. The progress report also demonstrates that a budget of 1 per cent. of EU gross national income is viable, credible and affordable. As I have said, we are working closely with the other five signatories of the 1 per cent. letter—France, Germany, Sweden, Austria and the Netherlands—to make sure that the principles of budget discipline continue to form a central part of negotiations.

Gwyneth Dunwoody: I am a little bemused. Since the Community's accounts have not been qualified by the auditors for the past nine years, how can we say that it is behaving responsibly?

Stephen Timms: My hon. Friend makes an important point. This is the 10th year in a row in which there has not been a satisfactory statement of assurance about the EU accounts. However, there has been progress in the right direction, particularly after the reforms that Neil Kinnock initiated when he was a Commissioner. Since January this year, an accruals accounting system has been in place, and it is a welcome step forward. To be fair to the Commission, it managed to implement it much more quickly than was widely expected or than has been the case in the UK. From that point of view, there is evidence that the Commission is putting its house in order, but my hon. Friend is right that there is some way to go before people across Europe can be confident that member states' financial contributions are being used properly.

John Bercow: Does the Minister agree that one example of the absence of joined-up thinking in the Union is the disparity between what is said on the subject of development and poverty reduction by the European constitution and what is demonstrated by the composition of the European Commission and the allocation of responsibilities? Is he aware that Commissioner Michel, who is responsible for development, has good reason to object to the fact that important parts of what ought to be his portfolio and his responsibility for expenditure are, in fact, in the hands of the Commissioner for External Relations? Is that not an example of the way in which important objectives end up being watered down or compromised by the competing political ambitions of people within the Commission?

Stephen Timms: I would not want to take issue with the hon. Gentleman's expertise on the Commissioners' portfolios, but there are important concerns about heading 4 of the EU budget, which applies to external actions and to which there is reference in the documents before the House. In the next financial perspective, we need an external budget structure that allows us to meet our priorities effectively and enables the European Union to be an influential and effective international development player. A number of issues need to be addressed if that is to be achieved successfully, and the hon. Gentleman may well have hit on one of them.

Chris Bryant: Obviously, all hon. Members would want the vast majority of EU development budgets to go to the poorest countries, and the Government have held out for that strongly in discussions with the Governments of other member states. However, there is concern, particularly in Spain, Portugal, France and Italy, about the Maghreb. It is almost the 10th anniversary of the Barcelona protest, but there has been remarkably little progress. Many nations regard the Maghreb countries as our neighbours, who need close attention if they are not to become asylum, immigration and terrorism problems for us.

Stephen Timms: I agree that we need to give a higher priority to low-income countries to meet the millennium development goals. Those are objectives to which the whole world has signed up. The European Union needs to play its part and we need a budget structure to develop that. I also accept that there are issues around the European neighbourhood topic to which my hon. Friend refers, but my view is that those can be satisfactorily addressed within the parameters that we proposed—the 1 per cent. figure that I set out—by working closely with countries that have the characteristics that my hon. Friend mentioned. So I caution him against a view that large additional spending is required in order to address those concerns. I am not persuaded that that is the case.

Richard Spring: Of great advantage to the countries around the borders of the Mediterranean, such as Algeria, are the Euro-Med agreements, which encourage trade and have a civil rights and democracy input. I am sure the Minister would agree that that is a valuable part of the role of the European Union in developing those countries.

Stephen Timms: Yes, I do agree. I had some exposure to that process when I was Energy Minister previously. I agree with the hon. Gentleman about the value of those arrangements.
	The next financial perspective gives us a valuable opportunity to make sure that the future activities and priorities of the EU and the principles on which they are based are right for the Union as a whole and for each of its member states, and right for the EU's relationship with the rest of the world, as we have just been describing. We are determined that that opportunity should be realised. The proposals that have been tabled so far do not meet the bill. We are determined, however, that we will reach a satisfactory conclusion. The European Council aims for political agreement on the 2007–13 financial perspective by June. We would welcome that timetable being achieved, but hon. Members will agree that the priority must be that we end up with the right deal for all member states. We are ready, if need be, to take that work forward in the UK presidency in the second part of the year.

Richard Spring: I thank the Financial Secretary for his opening remarks and I share his concerns that
	"the Commission's overall proposals are unrealistic and unacceptable."
	However, this is an extremely important debate as it is not only the future nature of the European Union that is at stake, but the impact on Britain's public finances. Last year we paid £11.8 billion gross and £4.8 billion net after the £7 billion rebate. Even with the rebate, Britain has been a disproportionate contributor ever since we joined the European Community.
	The Government have problems with that already, without the European Commission's proposals which would increase the amount that the UK must contribute to the EU, even if the Government succeed in defending their own budget. I therefore commend the European Scrutiny Committee for recommending the debate. The Committee recognised the significance of the documents before us.
	The Committee tells us:
	"The new Financial Perspective for the EU will determine the overall revenue and expenditure of the EU and the expenditure on each category of EU activity for the seven years from 2007 to 2013. It will also largely determine the net contribution to the EU of each Member State, and the future of the UK's budget rebate. It will in practice be binding on the parties to it for those seven years. It is therefore one of the most crucial forthcoming EU decisions, with important consequences for enlargement and the draft constitutional treaty."
	Because of the importance of the issue, we encourage the Government
	"to adopt a robust negotiating position."
	The Government have been high on rhetoric on this issue in the past. In a similar debate in June last year, the Paymaster General described the message being conveyed to EU Foreign Ministers by the Chancellor of the Exchequer as "uncompromising". She claimed that the Chancellor
	"made it clear that, when each member state has to take tough decisions on spending and show fiscal discipline, it is unacceptable and unrealistic for the Commission to propose a 25 per cent. increase in its spending."—[Official Report, 15 June 2004; Vol. 422, c. 704.]
	Nine months later, however, the same proposals are on the table in a more advanced form. It is time for the Government to translate their rhetoric into action at the European Commission, which is why we want a robust negotiating position to be spelled out. Words are not enough, because the matter is extremely important from a financial point of view.
	To illustrate how little progress has been made—we seem to have travelled backwards since the issue was first debated in June last year—I shall briefly examine the history of EU financing. In the 1980s, tension between the two budgetary authorities within the Community, the European Parliament and the Council, disrupted the annual budgetary procedure, which led to a series of budget crises. The result was negotiations between the Community institutions, which led to the first financial perspective in 1988.
	The framework lays down a maximum ceiling for spending under different expenditure headings. The current financial perspective, agenda 2000, covers the period from 2000 to 2006, so a new perspective is required. The European Union website states:
	"Since the European Union's public finances underwent major reform in 1988 and the financial perspective was created, there has been little change: the financial framework has simply been carried over with a few alterations to accommodate new priorities. It was time to start afresh and think hard about the Union's policies and the nature and number of instruments at its disposal".
	We do not doubt that logic.
	Since 1988, the EU has expanded, with the accession of 10 new member states on 1 May last year. Enlargement, a policy instigated by Baroness Thatcher and John Major, and, to their credit, continued by the current Government, was an historic moment. Like the Government, we object to the nature of the reforms proposed by the Commission. The Commission's first proposals were published in February 2004 in the Commission's communication, "Building our common future—policy challenges and budgetary means of the enlarged Union, 2007–2013", which was debated on the Floor of the House on 15 June last year.
	In "Building our common future", the Commission considers the enlargement of the Union, rather than proposing a reduction in the maximum size of the EU budget from 1.24 per cent. of gross EU income to 1 per cent., which is the figure that the Government and the Opposition want to see. The Commission proposes that the ceiling should remain at 1.24 per cent., and it cites commitments that have already been made, such as payments in the agricultural sector, cohesion policies in the accession states and accommodating Bulgaria and Romania, as an excuse.
	In June, the Paymaster General told us that the Commission's proposals were "politically unrealistic and unacceptable". She said:
	"It has failed to grasp the opportunity offered by the negotiation of a new financial perspective to increase the effectiveness and transparency of European Union expenditure and to consider how allocations within a limited EU budget can best be focused on adding value at the EU level, including underpinning the Lisbon strategy for European economic reform." —[Official Report, 15 June 2004; Vol. 422, c. 704.]
	We agreed. My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) stated:
	"The Conservative party supports many of the stated aims of"
	that day's
	"motion, especially on limiting total spending and on the 'unrealistic and unacceptable' proposals for future spending priorities."—[Official Report, 15 June 2004; Vol. 422, c. 718.]
	We can, and do, oppose and improve on the Government's mistakes in the UK Parliament, but by definition, as the Opposition, we cannot formally oppose or improve the European Commission's proposals in Brussels.
	The Government promised that they would fight the Commission's proposals on EU financing:
	"It is the Government's strongly held view that the Commission's current proposals are not a basis for . . . negotiation. The Government are working with other member states that share many of our principles and areas of common interest".—[Official Report, 15 June 2004; Vol. 422, c. 712.]
	What was the outcome of that work? Were the proposals deemed to be not even a basis for negotiation, and scrapped? No—they have been built on. The Government were forced to admit that the Commission's new communication
	"fails to respond to the diversity of views held by Member States, including the group of six Member States, including the UK, that wrote to President Prodi calling for the budget to be stabilised at 1 per cent. of EU GNI. It also fails to recognise the need for reprioritisation, so that funds are redirected where they will have most effect."
	We now have four documents before us. Two are reports—one on the EU's financial perspective for 2007–13 and one on altering the own resources decision—but two go a step further than mere reports. They are draft proposals. The European Commission is proposing a clear programme for a change that goes against the grain of thinking in Britain and on both sides of the House. Is that what the Government mean by "Forward, not back"? I hope not.
	I would like the Minister to explain. Now that we have actual proposals before us, rather than the less concrete plans of "Building our common future", how does the Commission intend to take those proposals forward? What room for negotiation is there in the proposals? How long is the period for negotiation likely to be? When does the Commission plan to issue what I hope will, by then, be substantially altered proposals for agreement? To put it another way, what is the deadline for an agreement to be reached? Can the Minister confirm that, if the worst comes to the worst, the UK or any other member state will have the right to veto the proposals? I sincerely hope that that scenario will not come about, but if a member state used a veto, where would that leave the framework for financing the EU? Is there a fall-back position of annual negotiation of the EU budget? I hope he can provide us with answers to those questions. If not, I hope that the Minister will undertake to write to me.

John Bercow: My hon. Friend will recall the intervention of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) who highlighted the disgraceful fact that for nine successive years—this year will be the 10th—the European Court of Auditors has refused to sign off the European Union's accounts. Is he aware that for the year 2003 the Court of Auditors' report found that no less than 89 per cent. of the EU's humanitarian aid expenditure to Zimbabwe was lost through currency manipulation by that corrupt regime? On that specific example of waste and misuse of public funds, what is the Commission doing to ensure that it is not taken for a ride in future, as it has been in the past?

Richard Spring: I am grateful to my hon. Friend for making that point. I shall touch on the question of how international aid has been handled by the European Union.
	On the essential point made by the hon. Member for Crewe and Nantwich and my hon. Friend, it is beyond disgrace that we contribute substantial sums of taxpayers' money to the functioning of the European Union when it is impossible to square the accounts. In any private company, that would quickly result in its bankruptcy or a lawsuit. It is greatly to our regret that, despite all the promises, that situation continues.
	My questions are important because, as the Government freely admit, the Commission's proposals are unacceptable in their current form. It seems that no progress has been made on improving them since June last year, so it is useful to know what scope there is for achieving improvements and how long we have to achieve them. The crux of the matter is that it is essential that the Government explain how they will achieve improvements in the proposals. We need significant improvements on both the main issues at stake.
	I want to speak about those two issues: the proposal for a new own resources decision and, first, the proposals for renewing the inter-institutional agreement setting out a new financial perspective for the period 2007–13.
	I note that in the context of the new IIA, the Commission proposes a new classification of expenditure to increase flexibility by avoiding unnecessary ring-fencing, with five main expenditure headings. The explanatory memorandum to the European Scrutiny Committee states that
	"The Government welcomes the Commission's proposal to retain the fundamentals of the previous IIA . . . breaking down expenditure by broad categories called headings".
	Does the Financial Secretary agree with the headings proposed? Similarly, I note the Government's concerns regarding the new proposals for flexibility, expressed in the motion. I am a little perturbed that expressing concern is not exactly the same as expressing opposition. While in his memorandum he states that he rejects proposals for a procedure to revise ceilings through a trialogue meeting between the Parliament, the Council and the Commission, and states that there is no need for a growth adjustment fund, he appears equivocal on the issue of the replacement for the current flexibility instrument. He states that he
	"will consider the Commission's proposals for a new reallocation flexibility, replacing the existing 'flexibility instrument.'"
	Has he now carried out that consideration? If so, what were his conclusions?
	Perhaps a bigger issue is the ceiling on the EU budget. The financial framework set out in the "Proposal for the renewal of the Inter-Institutional Agreement"—the IIA—sets a maximum ceiling on the budget of 1.24 per cent. of EU GNI. I believe that that is the same as the ceiling at the moment. Slightly alarmingly, the ceilings proposed by the Commission in December 2004 appear to be higher: the maximum is 1.3 per cent. and the Commission's proposed spending amounts to 1.26 per cent of GNI.
	As the Financial Secretary has said, those ceilings are too high. We should be aiming at a budget of 1 per cent. of GNI. The letters sent from the Governments of the UK, France, Germany, Sweden, the Netherlands and Austria to Romano Prodi in December 2003 made the point that a 1 per cent. limit would still allow for annual increases in the EU budget above the growth rates of national budgets in most member states.
	The issue of the EU budget is particularly thorny, because—as my hon. Friend the Member for Buckingham (Mr. Bercow) made clear—the EU has a reputation for spending its money badly. Fraud is one reason for that, but I will not dwell on that point as my colleague the shadow Paymaster General spoke on it in Committee very recently. Suffice it to note that for the 10th year in succession, the European Court of Auditors felt unable to sign off the European regional aid funds.
	In the explanatory memorandum, the Government flag up four issues on which they think that the EU should reform its approach. The issues raised are the common agricultural policy, structural funds, the Lisbon strategy and overseas aid. I am unclear as to whether those are the priorities to which the Government refer in their motion calling on the European Community budget to be refocused
	"towards the Union's key priorities."
	Perhaps the Financial Secretary would confirm that or, alternatively, explain to which priorities the motion refers.
	In any case, the four issues to which the Government refer in the memorandum are undoubtedly major issues and I shall make brief comments on them. As I understand it, under the Commission's proposals, the amount earmarked for the CAP reflects the agreements reached at the Brussels European Council in October 2002. That was the occasion when right under the nose of the British Government, France and Germany stitched up a deal to keep CAP spending unchanged up to 2013. We should not forget that more than 40 per cent. of the EU budget still goes on the CAP. The Economist noted on 5 March:
	"Yet it may be possible to reopen the Chirac Schroder deal . . . it sets ceilings not targets for spending. In the Doha round of trade talks, the EU has offered to scrap export subsidies for farm products. And, because past reforms of the CAP switch spending from production linked subsidies to direct payments, the case for financing these nationally, not at EU level is growing. If France's Government wants French farmers to have higher incomes than Greek farmers, why not pay for them themselves."

Ian Davidson: What would be the Conservatives' target figure for expenditure on the CAP, if we were to have a Conservative Government?

Richard Spring: I was about to move on to our policy, so I thank the hon. Gentleman for pre-empting me.
	The Government claim to be a leading advocate of CAP reform. According to the Paymaster General, the Chancellor has
	"told Finance Ministers that it would be wasteful and inefficient to increase spending on current Commission programmes that do not match the European Union's economic reform priorities and in some cases, such as the common agricultural policy, work against them."—[Official Report, 15 June 2004; Vol. 422, c. 704.]
	Since the debacle of 2002, the Government have had some success in achieving reform, and we welcome that. However, the CAP results in artificially high prices for consumers, harms the interests of third-world producers and leads to low incomes and red tape for farmers. My party has long campaigned for its reform, and the recent decision to break the link between farm subsidies and production is good news. CAP reform must now be taken further, and cross-compliance conditions should be reduced. I would welcome a commitment from the Minister that that process is under way.
	British farmers must be given the freedom to produce for the world marketplace. We will therefore press for the full decoupling of subsidy from production across the EU and for an end to trade-distorting export subsidies in all appropriate cases. Our first target will be the appalling waste of £600 million of taxpayers' money in subsidising tobacco production annually.
	We support the new single farm payment and press for it to be implemented with a minimum of bureaucracy and red tape. We will simplify the rules on cross-compliance and work for the return of more local and national control over agricultural policy, and we will stop the gold-plating of European legislation by British officials in the Department for Environment, Food and Rural Affairs.

Ian Davidson: Perhaps I missed it, but I failed to catch the figure that a Conservative Government would want to be spent on the CAP by the EU as a whole. Will the hon. Gentleman give us a figure that he believes that the Government should be aiming towards?

Richard Spring: I have laid out what our policy will be when we win the next election in a few weeks' time—I am sure that that is why the hon. Gentleman is concerned about the issue. After that, and after the vote on the European constitution, which the good sense of the British people will reject, there will inevitably be a negotiation process about all the structures of the European Union.

Ian Davidson: What is the figure?

Richard Spring: I cannot give one, because we do not know exactly what the final budget will be. We have clearly set out the direction that we wish to follow. I cannot give a precise figure, and it would be absurd to try to do so when the budget has not been finalised, but the hon. Gentleman can rest assured that we will commit ourselves to fighting Britain's corner, as did a former Conservative Prime Minister, Margaret Thatcher, to return the rebate to this country. We will do that with all the energy that has ensured that although we have remained a very big contributor, our contribution would otherwise have been much greater. We will do the same on CAP reform.

Mark Hendrick: Although the hon. Gentleman, like everyone else, does not know the total of the budget that will be agreed, can he tell the House what percentage of the EU budget his Government, if they were indeed elected, would want to have as CAP spending?

Richard Spring: If the hon. Gentleman would like to answer this question, we might find common ground: what is his Government's objective on that percentage?

Mark Hendrick: I am happy to answer that it would be the minimum. During the time of this Government, it has fallen from about 60 per cent. of the EU budget to about 40 per cent. What would the hon. Gentleman's target be?

Richard Spring: The hon. Gentleman and I do have something in common, as it would be the minimum.
	On structural funds, I again welcome the Government's approach. I agree with their policy of taking back control of structural funds. More national control over those funds would enable us to target them where they are most needed and to reduce the bureaucracy that surrounds their use. Philip Bradbourne MEP, Conservative spokesman on regional policy in the European Parliament, summed up our view as follows:
	"It is no surprise to me that the funds have yet again not been signed off.
	With ten years of dodgy accounts, including €5.3 billion going unused into Commission coffers from the Regional Aid Budget in one year, devolving grant aid back to Member States seems the only viable solution to an ongoing problem.
	This would allow British Ministers to properly determine where and how this money is spent."
	However, I believe that the differences will begin to show on Lisbon and international aid. The Lisbon agenda's economic objectives can only be supported, but economic reform is proceeding slowly on some matters and is frankly non-existent on others. I appreciate that the Government acknowledge that. The Prime Minister has taken the trouble to recognise it every year since setting out the Lisbon process. In the 2003 Treasury assessment of progress on Lisbon, his foreword admitted that
	"there remains a daunting amount to be done . . . Reform on this scale is never easy."
	In the 2004 assessment, he claimed:
	"We have made significant, but not sufficient, progress . . . we need to go further to meet the standards being set by our competitors elsewhere in the world."
	The 2005 report was published last month. The Prime Minister commented that
	"we need to go further and faster."
	The Government produce many fine words on Lisbon, and have done so since the agenda was first agreed five years ago, but little or nothing gets done. I welcome the fact that José Manuel Barroso, the new European Commission President, has presented a programme to re-energise the Lisbon process. It is vital that national Governments get a grip and push ahead with economic reform, on which the EU's future prosperity relies. Ministers pay lip service to Lisbon while eroding the UK's competitive position at home through ever increasing burdens of taxation and red tape.
	I want to consider aid. It is essential to make more effective use of the money that is currently spent multilaterally. There is a strong case for increasing national control over the aid funds currently spent by the European Union. In 1990, 70 per cent. of EU development aid went to the world's poorest countries, but that has now fallen to 52 per cent. Half the EU aid budget is spent on middle or high-income developing countries. That cannot be the best use of our overseas aid, which should help the poorest people in the world. To its credit, British aid does that; European aid, in many respects, does not.
	The former Secretary of State for International Development, the right hon. Member for Birmingham, Ladywood (Clare Short) agrees. She said that
	"anyone who knows anything about development knows that the EU is the worst agency in the world, the most inefficient, the least poverty-focused, the slowest, flinging money around political gestures rather than promoting real development."
	I believe that the EU should commit itself clearly to devoting the great bulk of its budget to the poorest countries and the most impoverished citizens. We should not tamely accept the status quo. Britain should set an example and press other member states to follow it. I call on the Government to publish a detailed annual assessment of all EU aid expenditure, describing Britain's involvement, the procedure for monitoring each project and an assessment of the results.

Chris Bryant: I thank the hon. Gentleman for allowing me to intervene before he perorates—if there is such a verb. He makes the point that others have made in similar debates, that most international aid budgets should go to the poorest countries. However, does he accept that, in some instances, such as support for the Palestinian Authority or in the Balkans, some of the policies that we in this country tried to pursue ended up with commitments that the EU met on our behalf?

Richard Spring: I understand the hon. Gentleman's point, but there are many mechanisms whereby the EU can deal with political and economic development in, for example, the Palestinian Authority, including Euro-Med agreements, which are helpful. I also believe that, in such a process, some assistance can be given. However, I think that he would agree that poverty and all that flows from it is the challenge of international aid giving in the 21st century, and that we should focus on that more than anything else. The problem is that the EU has not been efficient in doing that either managerially and functionally or in terms of the principles that underlie the aid programme. We handle these matters better in this country, and if that could be replicated in the European Union, it would not be the target of so much criticism.

John Bercow: My hon. Friend makes a superb case, but he is characteristically inclined somewhat to understate it. Will he take it from me that an illustration of the problem in relation to the European Union aid budget came when I tabled a number of questions—admittedly about 300—to the current Secretary of State for International Development, asking him for his assessment of the efficacy and value for money of the European Union aid projects to which Britain was contributing? The Secretary of State could manage only to provide an answer that referred me to a website. Does not that demonstrate the paucity of accountability, and suggest that if any savings that we make in the agriculture budget by getting rid of trade-distorting subsidies are to be spent on aid projects, they should be spent on bilateral aid projects rather than on multilateral ones?

Richard Spring: I am grateful to my hon. Friend for his intervention. A few minutes ago, I made the similar point that we needed greater transparency with regard to what exactly was happening to Britain's contribution to the EU aid budget. I pay tribute to my hon. Friend, whose knowledge and understanding of this matter greatly enhances the proceedings in the House. I agree that the focus that he describes commends itself to the House as we consider this important matter.

Ian Davidson: Does the hon. Gentleman agree that aid spending ought to be about assisting the poorest, and that those who seek to divert money earmarked for aid into financing the development of an EU foreign and defence policy—however worthy that might be—are in fact distorting priorities? There is no way in which aid money should be going to any other than the poorest people.

Richard Spring: I could not agree more with the hon. Gentleman. We all agree about giving aid to the poorest, and the governance of the countries involved is crucial in that regard. There is no point in giving substantial sums of taxpayers' money to the poorest if it is being skimmed off and not reaching them. The institutional underpinnings for economic development and human rights in some of those countries certainly need to be improved, and there must be a linkage between that and aid. On the hon. Gentleman's point about wasting money on some futile exercise in creating a foreign and defence policy under which we would lose our national control of such matters, I agree implicitly with what I believe he was saying: it would be absurd. I can assure him that when we are in government in a few weeks' time, that will certainly not happen.
	I should like to conclude by saying a few words about the Commission's proposals for a new own resources decision and its plans to scrap the UK rebate. Hon. Members will know that member states' financial contributions to the EU are based on the provisions of the own resources decision. The UK's contribution is adjusted by the rebate secured by Lady Thatcher, she of blessed memory, at Fontainebleau in 1984—

Chris Bryant: She is still alive.

Richard Spring: Yes, and I hope that she will remain in blessed memory in hon. Members' minds for ever, whether she is alive or whatever, in the future.

John Bercow: My intervention might be only tangentially related to the future of European Union finance, but before my hon. Friend digs himself in any deeper, may I assert that, in the minds of many, Lady Thatcher will never die?

Richard Spring: I could not agree more with my hon. Friend. Indeed, as always, he has expressed so much better than I did what I was trying, however inadequately, to say.
	The UK deserves the rebate, as it is ill suited to funding the EU through the current mechanisms. The Commission disagrees, however. Its report on "Financing the European Union" claims that
	"in any event, granting a correction on an exclusive basis to one Member State appears to be unjustified, especially when taking into account the expected evolution of the net budgetary balances in the enlarged Union under unchanged conditions."
	As a result, the Commission proposes to scrap the rebate, and to replace it with a general correction mechanism. As I understand it, that system would be available to any member state making what the Commission describes as "excessive budgetary contributions", but, unlike the current system, it would be entirely conditional on the application of what is called "the threshold" and all member states would be required to contribute.
	I am glad that the Government claim not to accept that. As the Secretary of State for Education and Skills said when she was Financial Secretary:
	"The Government believes that the current UK abatement remains justified and necessary to correct for the UK's disproportionate budgetary imbalance."
	Likewise, the Chancellor of the Exchequer has commented:
	"The abatement rebate is fully justified. We made that clear in Berlin in 1999 when the last EU budget was fixed and that continues to be the British position."

Gwyneth Dunwoody: I am grateful to the hon. Gentleman for allowing me to intervene. If the UK was unable to obtain a suitable arrangement whereby it retained exactly the same size of rebate, would he—if he were in government—cease to pay into the Community budgets money over and above the agreed sum? Can he make that clear?

Richard Spring: I can assure the hon. Lady that this situation will not arise—I am confident, and I return to what will happen in a few weeks' time—because such will be the clear message from the British Government on these matters that it will be known that any attempt to move beyond this will be firmly and utterly rejected.
	Most recently, the Financial Secretary stated:
	"In terms of the Commission proposal for a new Own Resources Decision, the Government's view is that the proposals are unrealistic and unacceptable. The continuing inefficiencies and inequities on the expenditure side of the budget, and the resulting unfairness of the UK position, mean that the abatement remains fully justified and is not up for negotiation."
	But these are all words. The Commission's proposals are still on the table. Nothing seems to have been achieved.
	Recently, there have been worrying reports that the Government have secured a deal with European leaders to postpone negotiations on the rebate until after the general election. Why is this? What have the Government got to hide? It seems to me that the only possible reason for putting this off until after the election is that the Government are preparing for yet another possible surrender of British interests in Europe. I hope not. It may well be that Britain, holding the EU presidency, may have to take the leading role in resolving this issue, if, as seems likely, Luxembourg is unable to secure agreement by June.
	In the unhappy event of Labour winning the election, British taxpayers will be landed with a bill not only for the black hole in the public finances, but potentially, although I certainly hope not, for the loss of the rebate. The Conservative party is as totally and absolutely committed to defending the rebate as a previous Conservative Government were to winning it in the first place.

Doug Henderson: Many of our colleagues in the House probably think that the relevant documents are somewhat esoteric. I am not one who would say that they are necessarily completely wrong on that matter, but, even if they are esoteric, that should not diminish their importance. I rather think that the issues contained in those documents and the policy outlined in the Government motion are central to the important debate that the country will have on the European constitution and, perhaps one day, on the euro itself.
	There are more fundamental issues in those documents as to the size of the European Union budget and how the budget is spent than in all the constitutional changes, which I have always seen as methodological. I do not see them as fundamental to how the EU runs and what it does. Not just in Britain, but throughout the EU, people always say, "What are we going to get out of it?" In a way, we are all to blame in that respect, and I concede that I am as guilty as others, or I certainly was in the past.
	I recall the public discussion in 1975 on whether Britain should remain in the European Union. In a sense, the earlier vote in 1972 on whether we should be in the EU was more honest. The issue got distorted in 1975 by the question of a little bit of money or a little bit of authority here or there. As a consequence, the British public—we are not unique, as other countries also have this approach—thought that the case for the European Union was wholly dependent on how much money we could get out of the organisation by belonging to it. Before the nationalist parties pursue their amendment, they should think a little more carefully about that. I shall perhaps mention later the importance of the EU to Scotland and Wales. We need to be cautious, however, about arguing for the European Union on the basis of how much money we get out of it.
	In my view, the European Union is about doing things together, not subsidising each other. Clearly, there must be an exchange of resources as different issues are tackled in different eras in the development of the European Union. As I think that the Financial Secretary said in response to an intervention, however, it is not about rich countries cross-subsidising each other so that the poorer parts of Germany subsidise the poorer parts of Britain and vice versa. That makes no sense at all. When considering the EU budget, we need to identify more clearly what are the priorities of the EU. We need to ask what the EU is for as we move forward in the 21st century. Until we do that, our arguments about the financing of the EU will be rather sterile. I shall mention later the context of public opinion, in which finances are important.
	Before the public are asked to judge on the finances, however, they should be aware—we all have a responsibility to encourage that awareness—of what the European Union is. I believe that the most important thing for which the European Union stands is the binding together of European countries to protect, to bring stability and security in Europe and to contribute to world security and stability. That is why I am in favour of the European Union—it is absolutely essential that the countries of Europe bind themselves together, and there is no other organisation to do that.
	The second argument, in my view, is that a large international organisation, which claims to have, and should have, a major security and stability role, cannot do that without having an important economic role, as the two go together. That is why the European Union must have a major economic role, too. That major role does not need to cost a lot of money, however. Some of the things that the European Union does are costly. Stability and security involve costs, but not colossal ones, because most of the contributions in that area are made by individual members. Some countries in the Union might be better at naval interventions, some at troop interventions, and some, in certain parts of the world—for example, the French in Africa and Britain in some other areas—at contributing to aid programmes and so on. A lot of the resources for that come directly from member countries, but those countries cannot work together unless they are bound by as common a policy as possible. We will not get international security and stability at all if the European Union cannot even agree on priorities in a relatively rich area of the world. Therefore, there are costs in relation to security.
	Economic policy can have costs, depending on how it is designed. As long as there is agricultural support, whether in the current common agricultural policy or some other regime, common funds will need to be raised to be disbursed according to rules and regulations agreed by everyone. So there will always have to be discussions about the size of the agriculture budget. Other measures, however—such as the economic initiatives of which, perhaps, a few more should have resulted from the Lisbon agreements—do not involve much cost, apart from a measure of administrative cost. They involve no huge subsidies.
	If the enlargement of the European Union is to fulfil the hope of many of us throughout the House that the countries that entered in the last wave will establish values and standards similar to those in existing EU countries, and will aspire to the same economic conditions—if they are to be brought into the house, as it were—there will be some costs to the rest of us. As one who represents a relatively poor part of the United Kingdom, I can say that there will be costs even to areas such as the north-east of England. The structural fund regime that we in the north-east may have expected in the past cannot continue for ever, because of other important priorities in some of the new EU countries.
	Some may ask, "What is the point of our being in the EU if we in Tyneside are not getting the deal that we used to get?" They should bear in mind the importance to Tyneside's electrical and manufacturing industries not just of inward investment following active participation in the EU, but of defence contracts for such things as aircraft carriers, which are largely dependent on European security and stability. I do not believe that those contracts depend solely on NATO, although I am a strong supporter of NATO; I think that, in today's world, the EU must play a major role.

Chris Bryant: As my hon. Friend said, his area—like mine—has received considerable support from structural funds and from the EU. Perhaps he will also point out that by allowing greater economic prosperity in some eastern countries in the new enlarged EU, we are helping them to compete in the bargain basement and thereby to deprive areas such as his and mine of jobs.

Doug Henderson: That is absolutely true, but when considering the economic consequences of Latvia, Poland or the Czech Republic joining the EU, we should bear in mind the opportunity that it gives the British economy to trade with them at a higher level in future. Some may say that that is pie in the sky, but that does not apply to trade flows between Britain and Portugal and between Britain and Spain. There has been a vast increase in activity in both directions, but to our advantage in many respects. If I were speaking from the Dispatch Box, I would check the figures before making that assertion, but I think it is broadly correct.
	There are many other spheres in which we must act together, which I think are important to democracy and civilisation in Europe and which involve minimum cost. Costs are involved in asylum and border policy—another important issue—but if we are to have public support in the west of the European Union, the people in the west must be satisfied that the same standards of asylum and border control obtain in the east. If some of the eastern countries cannot fund those standards at present, there must be a degree of payment transfer in the short and, possibly, the medium term. Many important things that the EU does, however, do involve minimum cost.
	Members are bound to mention aid, and they can make that as big an issue as they want. Of course aid involves cost, which must be kept in reasonable proportion—although I support a common European policy on some aspects of aid. I am involved in the sugar regime because of constituency interests in the chocolate industry. I think that it would be wrong to restructure that regime without considering the consequences for the various poorer countries that are affected. If the European Union decides to restructure the regime—which I think it should—it must take account of those consequences. The process will not work if everybody in the EU is bound by the new sugar regime but not by the aid regime. So it is important to take common action within the EU on this issue and I strongly support doing so, although I recognise that there have to be limits. It is a question of bargaining with the other countries and of looking at what is acceptable to public opinion across Europe.

Ian Davidson: I am grateful to my hon. Friend for giving way on this important point. He has spoken very sensibly on the question of solidarity within Europe and across the world as a whole, but surely the test of financing via the European Union is whether or not it adds value. The objection that many of us have to giving ever-increasing sums to the EU is not that we do not want co-operation, but that such money is sucked into a morass of fraud, corruption and inefficiency. As a result, we obtain less bang for the buck than would otherwise be the case.

Doug Henderson: I thank my hon. Friend for his intervention, with which I partly agree. The EU needs to decide the borders of the territory within which a common aid policy is to be implemented. Such borders will be movable, depending on world events. For example, there is a need sometimes to be involved in, say, Bosnia, and it is perhaps worth considering funding such undertakings from a security budget, rather than from the aid budget.
	I want such money to be audited effectively and spent well. I know from past examination of such matters that it has not always been spent well, which is why, often, the auditors will not sign it off. But that issue is separate from the question of whether we should spend such money; rather, it concerns ensuring that if we do spend it, it is spent properly, and that there is proper accountability. I hope that my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) agrees that we need to draw that distinction.

Gwyneth Dunwoody: But let us consider the example of a local authority supported by large sums of money, raised through taxation measures implemented by this House. If, over a period of 10 years, there was clear evidence that the people taking in that money were not conforming to proper auditing rules, were unable to account for much of it and were frequently making it clear that they had been involved in fraud and corruption, would my hon. Friend accept that?

Doug Henderson: Perhaps my hon. Friend could clarify her question. Would I accept what?

Gwyneth Dunwoody: Would my hon. Friend accept such behaviour? Would he accept such an arrangement in respect of any other organisation with which this House has dealings—or in respect of any other form of taxation, be it local or national—if there was clear evidence of fraud and corruption, and if the auditors refused for 10 years to sign off the accounts?

Doug Henderson: Of course I would not, and as I tried to say in response to my hon. Friend the Member for Glasgow, Pollok, this issue must be tackled. There is a need to improve the EU's auditing process and its financial planning, but that is an argument not for getting rid of the EU or for curtailing its activities, but for ensuring that, once we have defined what its responsibilities and priorities should be, the budgets are fairly tightly geared towards them. That can be done, but such things are more difficult to do at international than national level.
	On the point raised by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), if a local authority were questioned about auditing, there would be discussion and argument among the various political parties and institutions in the city in question as to whether taking serious action against the authority was worth the candle. Hopefully, the answer would be yes, but a lot of negotiation has to take place before such action can be taken. However, I hope that my hon. Friend understands that in the EU, one has to multiply that process by the large number of member countries within it, which makes such discussion and the decision-making process more difficult. I do not say that to defend inefficient procedures or unaudited accounts, which I believe should be dealt with.
	Before finishing, I want to mention a few important aspects of what the EU does that do not cost much money. Technology exchange and university links are significant developments within the EU that can help to bolster our industries. The aircraft carrier provides an interesting example. It is now unthinkable that such a complex and costly project could be developed within one country alone. The aerospace industry needs to look at the broader sphere. Technology transfer can be beneficial not only to the relatively well-informed technological nations of the EU, but to the less well-informed ones. The costs are minimal, but the EU has a fundamental role to play. Those are the arguments that we have to put before the public.

Kelvin Hopkins: rose—

Doug Henderson: I may give way in a few moments.
	The EU has also had an important role to play in respect of human rights. We cannot talk about human rights throughout the world unless there is a system based on human rights within the EU. Again, systems based on human rights do not cost a lot of money, just relatively low administrative costs.
	Environmental issues can be costly if major improvements are being sought in either the private or the public sector, and that applies whether or not those improvements are being implemented at the country level or the EU level. I believe that we have to strike an appropriate balance over funding, but the rules governing power station emissions and all the rest of it must be determined at European level. The only organisation in Europe that is capable of achieving that is the European Union. Many other examples of projects that do not cost much money could be cited.
	If the question is how much money should be spent, the answer is that, in a sense, we can never spend enough. All the issues that I have articulated in my speech—they have also been articulated by Front Benchers and others in the debate—potentially cost money, and the amount of money needs to be controlled. There needs to be an ongoing public debate to justify the importance of what the EU does and to gain public support for the funding. We should justify the EU in the same way as we continually justify the importance of the national health service. Very few people argue against the need to finance the NHS, though there may be arguments about the effectiveness of the spending, and we have to make exactly the same arguments in favour of the EU. We need to bring EU budgets to a level that is acceptable to public opinion.
	I ask the Minister to tell us a little more about the timetable for taking the process forward—the hon. Member for West Suffolk (Mr. Spring) asked the same question—and to explain in greater detail what Britain intends to do during its six-month presidency.

Paul Tyler: I am delighted to follow the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), who said many things that I agree with. His comments are made on the basis of greater experience than I have in this particular area of policy. What he said about the linkage between aid and trade was particularly important. I heard the Front-Bench spokesmen debate the matter earlier and I broadly concur about the national role in comparison with the Europe-wide role. That is a perfectly fair point, but we should all recognise that no one is blameless in the matter.
	No country's aid programme under any Government has been as effective or as well targeted as we would like, not least because it has occasionally been supplemented by arms sales policies that definitely do nothing to promote the right relationships between Governments. On that score, I agree with what the hon. Member for Newcastle upon Tyne, North said, and I also accept what he said about the constitution. The sooner Europe has a constitution that limits and codifies the different roles and governance, the better. I hope that we will achieve that—[Interruption.] I can hear some sedentary contributions from the Conservative Benches. However, the argument that the hon. Member for West Suffolk (Mr. Spring) made on behalf of his party actually led to that conclusion; we need more effective codification of the different financial responsibilities in Europe.
	The hon. Gentleman talked in most helpful terms about the context. I want to say a few words about the financial context. As I understand it, the EU budget is limited to about 1 per cent. of total national income in member states, compared to an average of about 45 per cent. for national Government budgets. That is a different cup of tea—a different scale of operation. Furthermore, the EU budget has risen about 8 per cent. since 1997, which is less than the rate of inflation, at a time when the UK budget increased by between 60 and 65 per cent. The common agricultural policy takes a whacking 45.8 per cent. of the whole EU budget—a point to which reference has already been made. That is a huge figure, yet in a sense it is outwith our discussion this afternoon. I shall come back to that point in a moment. Incidentally, those figures do not even include support for the common fisheries policy.
	Built into the main document before us, "Financial Perspectives 2007–2013", is an implicit tug of war between two distinct approaches to regional aid programmes—structural funds, which have already been a feature of the debate. I represent an area that already benefits from objective 1 status. Other such Members are in the Chamber. I am well aware that in Cornwall, mid and west Wales, south Yorkshire and Merseyside we are subject to an explicit threat from the Treasury. It is for that reason that we have some sympathy for the amendment tabled by the hon. Member for East Carmarthen and Dinefwr (Adam Price). Unfortunately, by excluding the whole second half of the motion, the amendment would remove any hope of retaining the UK rebate. I do not know whether that was intentional. As the Minister said, the figure would be £5 billion by 2013. The Welsh nationalists are prepared to sign that away, so I am afraid that we cannot support the amendment.

John Gummer: Does the hon. Gentleman agree that the European Union has had a remarkably good effect both on regional development and because countries such as Ireland started off being in receipt of large sums of money but will soon become net contributors? Is not that a remarkable achievement, given how much more successful they were than the British?

Paul Tyler: The right hon. Gentleman is right. I am delighted to agree with him. Some years ago—possibly when he was a Minister—some of my colleagues from Cornwall and I visited Ireland to examine precisely what good use had been made of EU structural funds. We came to the conclusion that if we could complete the border between Cornwall and England by taking a bulldozer towards the Irish sea from the Tamar, to shift or tug ourselves over and attach Cornwall to Ireland we should be doing better than under the right hon. Gentleman's Government.

Kelvin Hopkins: The success of Ireland is welcome and I have many Irish constituents who agree. However, given that the net contributions from the European Union to Ireland amounted to 5 per cent. of gross domestic product, which in Britain would be more than £50 billion every year, and that Ireland joined the euro at a relatively low parity for its currency and had to reduce interest rates, it is hardly surprising that the economy boomed.

Paul Tyler: I understand the point that the hon. Gentleman is making. I was not suggesting that England, or indeed Wales and Scotland, should join Ireland and benefit—simply Cornwall.
	At present, there is a clear plot to undo some of the good work that the right hon. Member for Suffolk, Coastal (Mr. Gummer) and I agree is going on in some parts of the United Kingdom. The Library briefing shows that some real economic progress is beginning to come through from the objective 1 process. GDP per capita in Cornwall, for example, is up from 70 to 72.6 per cent. of the EU average in just two years. That is more than the whole of the previous six years. The situation is similar in other objective 1 areas although, of course, we all started from a low base and the improvement is painfully slow. To pull the plug on the objective 1 process in the period between 2007 and 2013 would deal a devastating blow to our economic and employment activity rates just when they are showing signs of sustained progress.
	Unfortunately, UK Ministers constantly bad-mouth such programmes. In the debate in the House on 15 June last year, the Minister for Industry and the Regions said that she wanted
	"to get away from the stifling effects of Commission bureaucracy on structural funds projects."—[Official Report, 15 June 2004; Vol. 422, c. 747.]
	However, Members from all the objective 1 areas know only too well from our contact with the local communities, local authorities and their partners that the problem is not the bureaucracy in Brussels, but the bureaucracy up the road in Whitehall. We constantly face that problem. I accept that there is a trade-off because, of course, the bureaucrats say that they are monitoring and auditing everything that is going on, but to complain about the bureaucracy in Brussels is completely misplaced in this respect.
	As a result of what is now proposed, there is a well-founded suspicion that the Chancellor has set his sights on the repatriation of regional support funding programmes, not so much to save taxpayers' money, but to gain control of the direction of such investment, first, to concentrate it where it can be of political benefit to the Labour party—regretfully that clearly will not be in Cornwall—secondly, to limit the Treasury's match funding commitments and, thirdly, to avoid longer-term investment in specific areas of the UK.
	The Chancellor and his ministerial colleagues have done nothing to remove our fears, and almost all MPs from objective 1 areas have expressed serious concern about the complete lack of realistic guarantees. The objective 1 group in the House has, for example, pointed out that the EU programme lasts for seven years, but that the Treasury can promise only three years of assistance, with no commitment to match funding comparable with what we have experienced in phase 1. So are the savings sought by the Government, within the package and implicit in what we are considering now, real and realistic?
	Incidentally, I find it odd that the Conservative spokesperson, the hon. Member for West Suffolk, assumed that we could do nothing about all this. He even seemed enthusiastic about what the Chancellor is up to in respect of objective 1 areas. It happens that Cornwall is a Tory-free zone—indeed, as are most of the other objective 1 areas—but to deny the useful contribution that objective 1 status has made to our economy and so on seems extraordinary.
	My colleagues and I have met officials from the appropriate directorate of the Commission in Brussels who believe that such savings are neither real nor realistic. Unless the Chancellor is prepared to preside over a sharply reduced impact on regional development in the UK and is successful in persuading the majority of the other 24 member states to do the same, this attempt at a unilateral break-out is clearly doomed. Meanwhile, the effect of the Government's refusal to compromise is delaying vital decisions and leaving UK local authorities and their partners in a state of dangerous confusion—they simply have no idea what will happen or when—and the potential for avoidable waste and dissipation is immense.
	We seek an explicit reassurance from the Minister. What will happen and when to such regional funds? What guarantee is he prepared to make? Frankly, given the Chancellor's obstinacy, there is little prospect of finding any solution to the problem before the end of June. If he thinks that he can bully his opposite numbers into agreeing with him during the British presidency, many MEPs, from all parties, are simply convinced that that is wishful thinking.
	A great deal has already been said about the CAP. As I made clear at the outset, the CAP is the real meat of the EU budget. The 2002 deal, which was referred to earlier, struck between the French and German Governments has resulted in a continuation of many of the least satisfactory and least sustainable aspects of CAP expenditure. Reference has been made to the sugar and tobacco regimes, both of which are clearly undesirable in the medium to long term. The sugar regime is not finalised and could still be revised much more effectively.
	I recall that the then Minister for Europe, now the Leader of the House, whom I shadow, said that the CAP's
	"quick reform is imperative, and it will not bear the weight of enlargement without it."—[Official Report, Westminster Hall, 16 April 2002; Vol. 383, c. 121WH.]
	We now have enlargement, yet the CAP is not fully reformed. That is unfinished business.
	Where were the United Kingdom Government when the latest Franco-German CAP deal was struck? Did our Ministers, let alone the Chancellor, fight for effective restraint on that huge element of the overall Brussels budget? They seem to have been conspicuous by their quiet acquiescence.

Ian Davidson: I agree with the hon. Gentleman about the need to reform the CAP. What is the amount he believes that the European Union should allocate to the CAP?

Paul Tyler: If the hon. Gentleman has farmers in his constituency, he will know that we are in a difficult transition period. I think that he will agree that change should have taken place under the previous Conservative Government.

Ian Davidson: What is the figure?

Paul Tyler: I am trying to explain the situation to the hon. Gentleman because I am not sure how many farmers he has in his constituency. The process of transition is, by its nature, expensive—change is always expensive—so I do not expect a reduction to below 40 per cent. of the total EU budget during the transition period. However, we should certainly aim for such a figure after that period and thereafter I hope that we will see real improvements. I hope that that satisfies the hon. Gentleman. I also hope that he will note that the most important thing for both farmers and consumers is not the CAP, but tackling the problems caused by middlemen in the food process. Although it would be inappropriate to discuss that matter at length today, the processors and the retailers are creaming off money that should go to the original producers.

Ian Davidson: I am just a simple country boy, so I do not understand from that long answer the amount that the Liberals want spent on the CAP. Can he just give me a figure?

Paul Tyler: I do not think that the hon. Gentleman is listening. I explained carefully that the process of transition—it should have started much earlier and it is unfortunate that it did not happen under the previous Government—will be expensive. I cited a reduction to about 40 per cent. of the total budget by the end of the process and hope that it will come down further after that. I hope that that satisfies the hon. Gentleman.

John Gummer: Is it not noticeable that Labour Members are extremely good at attacking the common agricultural policy without recognising the important changes that have taken place, the effect that those will have on farmers and the need for farmers to have a reasonable time to adjust to them? At the same time, those people expect to have farmers' votes.

Paul Tyler: I entirely agree with the right hon. Gentleman, who speaks as a former Minister. The transition process is not easy. He has a big agricultural community in his constituency, as do I, so he will agree that if the process had been started earlier—I am not blaming him and his Government for that—things might have been easier, especially given what has happened over the past 10 years with bovine spongiform encephalopathy and foot and mouth. The livestock industry has suffered a lot of blows, although that might not worry him as much as me. The change process is not painless and will take time.
	The European regional development fund to which I was referring is, frankly, small beer alongside the CAP. Only a small improvement to the application of the CAP would be effective, which is why those of us who represent objective 1 areas are worried, nay apprehensive, about the way in which the Chancellor seems to be targeting the development and structural funds rather than the CAP. We are far from convinced that the Government have either identified the right targets for reform and retrenchment, or secured the necessary allies to achieve that.
	Anyone who doubts the wisdom of carefully extending the application of qualified majority voting should take a hard look at the way in which only a few Governments of member states have managed to stymie radical reform of the CAP and the common fisheries policy with the use of their vetoes. Surely such reform requires a consensual approach rather than unanimity.
	Budgetary discipline is the subject of another of the papers before us. To a non-accountant, the paper seems to be dangerously complacent, and that was reflected by the exchanges between the Conservative and Labour Front-Bench spokesmen. The mechanisms might seem to be "an efficient tool" to those in Brussels, but the outcomes suggest otherwise. As hon. Members have said, the European Court of Auditors has refused to sign off the EU accounts for the 10th year. That is outrageous, as the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) has reminded us several times this afternoon.
	Surely the UK Government should concentrate on achieving an effective audit trail in all member states for all EU funds. Until then, it might be more reasonable to insist on a freeze on the budget as a share of gross domestic product in the Union. That would allow a real increase, but only in line with the growth of the EU economy. I find it difficult to understand why that explicit statement—using both a carrot and stick—is not deployed more effectively by European countries that are worried about the lack of effective budgetary discipline. It should surely be said openly—it should have been said in the famous letter of 2003—that until the EU gets a firm grip on its budgetary disciplines, there should be no question of an increase in overall expenditure.

David Heathcoat-Amory: If the hon. Gentleman is now so keen on budgetary discipline, why was it that no Liberal Democrats or their allies tabled or supported amendments to the European Convention to improve the scrutiny process or to strengthen budgetary discipline in the European constitution?

Paul Tyler: I cannot answer that question because I do not know the details. I can tell the right hon. Gentleman that my colleagues on the Economic and Monetary Affairs Committee have been making a specific proposal to link any consideration of any increase in the overall budget to the issue that is before us. That is specific within the European Parliament. I cannot speak for the Convention, but the European Parliament has the same sort of responsibility for the scrutiny of the budget, but perhaps not to the same degree as we in this place in terms of the UK budget, and perhaps not as much as the right hon. Gentleman and I would like, and initiatives have been taken. I agree entirely that fraud continues to disfigure the reputation of the EU.
	The lack of clear management accounts is clearly an obstacle to the scrutiny of spending. It seems odd that there is not a specific linkage in the Government's proposal, and in the motion, between that and the issue of the overall budget.
	I move on briefly to the issue of a general correction mechanism and the own resources system. The two papers, and the Government's response to them, raise fewer issues of principle, at least to my mind, but as always, the devil may be in the detail. The Minister may be able to tell us that there are still some difficulties. I think that there is unanimity across the House that we must stand firm. That is why I find it unfortunate that the amendment to which the Welsh nationalists have put their names would seem to undermine that position. I hope that the amendment will not be carried.
	Enlargement has been mentioned several times. The Government, and the Conservative Government before them, have been enthusiastic about enlargement. I have always believed that the reinforcement of budgetary control should have preceded the expansion to 25 rather than followed it. Deepening should have been given precedence over widening. However, we have to live with the world that we now have.
	The Commission is now saying that the larger budget that it is seeking is necessary to consolidate and continue the process of enlargement and to achieve better cohesion with the economies of the new entrants. We have yet to see how it can persuade other Governments, including our own, that it has not wished the end without supporting the means. As has been said, the Lisbon agenda is also extremely relevant.
	The core issue should not be only "How much?" but "What for?" We have the famous 2003 letter to the then President of the Commission to which there were six signatories, including the UK Government. It was remarkable in that it made no direct reference to CAP reform. It assumed that the Franco-German deal was a done deal and could not be reopened. That was a grave mistake. It was extraordinary that it did not make any direct reference to better financial management and audit supervision.
	This morning, in The Guardian, Lord Hattersley quoted Mr. Gladstone, whom I suppose I could call my right hon. Friend. He made a sensible and sane statement some 120 years when he said:
	"Things are done best by those who believe in them."
	To us, the Chancellor seems all too anxious to carve up the most cost-effective EU regional programme while failing to insist on CAP pruning and meaningful audit tracking of waste. We just wish that he would believe more in the EU and less in his own omniscience.

Gwyneth Dunwoody: The connection between politics and taxation is a direct one. Parliaments exist not only to collect taxes, but to decide the priorities for those who are involved in how those taxes should be spent. There is a direct relationship with elected Members, in terms of the decisions that are taken, that is emphasised by the fact that in a Parliament such as this, we are constantly presenting ourselves for re-election. We say to the electorate, "We want your taxes for these purposes. If we do not fulfil them, we shall offer ourselves for re-election and you may then decide whether we have fulfilled the programme that we offered you at the last general election."
	It is therefore extraordinary that we should be debating, with the assistance of some extremely good reports by the European Scrutiny Committee, an arrangement that for a period of well over 10 years has not been audited properly and has resulted in the collection of considerable sums of money from the taxpayer. That money has been spent on a series of initiatives, some of which have rather strange priorities, but the Commission is still not capable of demonstrating in a clear or transparent manner how it controls its own finances. I asked my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) a question about what he would do if a local authority could not demonstrate how it had spent taxpayers' money and which projects it had supported, for the simple reason that the principles of accountability are the same whether the organisation is local, national or international. It is extraordinary that year after year, we have debates, sometimes attended by very few Members of Parliament—although that fact is of practically no importance—in which we consistently agree that we need more transparency, better audit trails and more control over the way in which the Commission makes decisions. We decide, however, not to take action that week or the week after. We might even fail to take action in a few months' time, but people need not worry because we will do something eventually.

Mark Hendrick: Is my hon. Friend not aware that the European Parliament has a Budgetary Control Committee? Indeed, even though the auditors have not signed off previous budgets, the European Parliament is made up of directly elected Members from this country and 24 other member states who can stop the budget in its tracks, and have occasionally threatened to do so?

Gwyneth Dunwoody: I spent four and a half jolly years in the European Parliament, and I can assure my hon. Friend that not only do I know about the tricks and games of that Committee but I know that the European Parliament's powers, which could be used to control the Commission, are rarely used, because they are blunderbuss powers. There has been only one attempt to discipline the people in charge, so my hon. Friend's argument is singularly unconvincing.

Kelvin Hopkins: Is not the reality that Ministers in Governments across Europe, and, indeed, in the European Parliament, do not want to kick up too much of a fuss for fear of being seen as non-communautaire and guilty of shaking the whole arrangement to pieces?

Gwyneth Dunwoody: I am afraid that I cannot answer for any Minister, thank God. It is many years since I was a Minister. However, I would like to say something about one or two important matters.
	I have listened carefully to my hon. Friend the Minister, and I accept that he and the Chancellor are strongly committed to the securing of a sensible arrangement. We should welcome the fact that they will not go above 1 per cent.—indeed, they should sing it from the rooftops as loudly as possible. Nevertheless, I have one or two questions for the Minister. If, for any reason, our position is not accepted by the other member states after the election, what will be the attitude of the United Kingdom Government? Will it be the same attitude adopted by the present Administration, who will not contribute a sum over the amount specified by the Chancellor? If so, how do we intend to maintain that position? Is it true that in moving to a different arrangement for the payment of regional funds we will insist that the community provide a buffer and a suitable amount of cash to ensure that UK regions that receive support will not lose it without a targeted and tapered programme?
	Is it not possible for the Minister to say that if we are required, at the end of another 12-month period, to accept accounts that are not qualified or audited properly, a demand for extra money for a larger budget and a change in the way that the United Kingdom retains its rebate, we—the United Kingdom—will take action to protect the sums that are going into Community organisations?
	It is all very well to say to the taxpayers of this country that, in comparative terms, we are dealing with a small sum of money. I noted in the papers before us the wonderful phrase that it is only 1 per cent. of budget, whereas, after all, the individual states are spending 48 or 49 per cent. more. Whatever the size of the budget, what happens to that money should concern us. We know that in certain cases, and certainly in relation to overseas development, money is not only squandered, but frequently lost. We know that in relation to many of the individual institutions, there is open corruption and frequently very little accurate accounting for the sums of money that are put into various developments. Beyond that, we also know that as a Parliament, for the first time in almost 800 years, we are being required to do something that would be unacceptable in any other sphere. We are being asked to tax the people of this country, to use that money by transferring it to a much larger organisation and to be unable to assure ourselves that those sums are being correctly, honestly and effectively spent. How long can that state of affairs be allowed to continue?

Adam Price: I beg to move amendment (a), leave out from "resources system;" to end and add
	'and reaffirms the need to continue EU structural funding.'.
	It is an honour to move the amendment in my name, and a rare privilege for Plaid Cymru and the Scottish national party. The issue is vital to West Wales and the Valleys, and we wanted to focus on the structural funds and regional policy. May I say to the hon. Member for North Cornwall (Mr. Tyler) that it is always difficult to knit an Opposition amendment into a paragraph that eulogises the Government, and I am sorry if I failed on this occasion. We thought it was important to give hon. Members an opportunity to divide on an issue that is of such great importance to our communities before the general election and before decisions are made. That is the intention of the amendment.
	Regional policy is important not just to my community; it goes to the heart of the European Union that we are trying to create. Implicit in the Government's policy is the notion of the renationalisation of solidarity. Solidarity is an important component of the notion of European citizenship that we are trying to create. We are grateful to the hon. Member for West Suffolk (Mr. Spring) for pointing out that the spectre of Thatcherism, if not the spirit of Mrs. Thatcher, still haunts us.
	In the experience of my community, European regional policy provided a valuable safety net through the terrible, devastating years of Thatcherism. It provided practical value to our communities in the form of individual projects, and was also a beacon of hope because it showed that another way was possible—that there was a different model for society and the economy, and that the neo-liberal model that was on offer at the time could at least be ameliorated by European regional policy, and we are grateful for that.

Richard Spring: The hon. Gentleman is rewriting history a little. Massive inward investment into Wales was secured in those years, particularly from the Japanese, which transformed the manufacturing base in south Wales, much to the benefit of the economy of Wales. I also remind the hon. Gentleman—I hope he has the generosity to accept this—that there was during those times a regeneration of the Welsh language and an acceptance of Welsh broadcasting that had not happened before.

Adam Price: If I were to respond, I would be going rather wide of the subject that we are debating. In the past few days, a report from Sheffield Hallam university showed that only half the jobs that were lost in heavy industry, mining and steel have been replaced through inward investment in manufacturing, so sadly they do not make up for the terrible policy of breakneck de-industrialisation under the Tories.
	We were fortunate in those days that we at least had the safety net of European aid. That is why it is so important that we uphold the principle of an EU-wide regional policy. I have no appetite for the return of a Tory Government. I have no appetite for the present Government's dalliances with neo-liberal policies either, but I am certain of one thing: there is more economic security for our communities if we retain the principle of EU-wide regional policy.

Mark Hendrick: Does the hon. Gentleman agree that that regional policy will continue, and that European structural funds provide a medicine to restructure industries in particular regions of the European Union, and are not intended as a permanent means of support? Are there not countries in the EU now that are more in need of that medicine as a result of the fall of communism than certain parts of the UK?

Adam Price: I agree with the first part of the hon. Gentleman's intervention. His point is well made. What we want in all our communities is not charity. We do not want permanent dependence on any funding source, whether at central Government or European level. We want help to help ourselves. The Government are right to stress that in their statements on regional economic policy. Developing endogenous potential—indigenous potential—is the way forward. [Interruption.] "Endogenous" if I were giving an economic seminar; "indigenous", perhaps, in the Chamber. That has always been the key component of European regional aid as well.
	The startling example of the Republic of Ireland was mentioned earlier. Since about 1987, it has had an incredible record of economic growth, partly—not wholly—because of a very successful strategic exploitation of structural funds, and also of the cohesion fund, for which it was eligible as a poorer member state.

Doug Henderson: I do not want to labour the point, but does the hon. Gentleman accept that the nationalist parties in Scotland and Wales are effectively arguing that the structural fund regime, broadly as it stands, should continue because it is essential for the Scottish and Welsh economies, but that he fails to see the change in the nature of the European Union? If the existing principles were applied, very few parts of Scotland and Wales would qualify, unlike the areas mentioned by my hon. Friend the Member for Preston (Mr. Hendrick). It is in the interest of Scotland and Wales to move with the times.

Adam Price: In the case of Wales, the new figures contradict the hon. Gentleman's point. At this point West Wales and the Valleys come beneath the 75 per cent. benchmark for eligibility for the new convergence fund, because unfortunately it is one of the poorest regions of the European Union, even after enlargement. Overall prosperity in Anglesey, for example, is 53 per cent. of the average for the 25 EU member states. We are always being told that the UK is one of the richest member states and that it has the third or fourth largest economy in the world, so it is incredible that an island in Wales has half the average EU prosperity, even with the inclusion of the enlargement countries, which had to cope with 40 years of communism.

Kelvin Hopkins: Does that point not make the case for a massively increased regional budget within the United Kingdom and for big transfers of income and wealth from richer areas to poorer ones? Is that not the real answer?

Adam Price: I do not see it as an either/or proposition, and I am not sure whether the hon. Gentleman does. Nothing precludes member states from pursuing a more robust regional economic policy. The French Government, for instance, have a broader and deeper commitment to regional economic convergence than the UK Government. Nothing precludes the UK Government from, for example, using fiscal incentives more broadly. Spain allows the Basque country and Navarre to vary their own corporation taxes, because that proved to be such a valuable tool in obtaining inward investment in the Republic of Ireland. We could pursue a more robust regional policy while retaining European funding.

Doug Henderson: I do not want to labour the point, but the assertion that Wales would qualify for structural funding is based on the old rules, not the future rules. Surely the hon. Gentleman understands that the average per capita income in Poland is about $5,000—even in Slovenia, it is about $10,000 or $11,000. I am not saying that there is not a street or small area in Wales that contains such income levels, but there is no overall area with such income levels in Scotland or Wales, which is why the House is asking the hon. Gentleman to understand that the structural fund regime is anachronistic.

Adam Price: I hate to have to correct the hon. Gentleman again, but on 25 January EUROSTAT published the latest regional GDP figures, which show that the GDP of West Wales and the Valleys from 2000 to 2002 was 73.8 per cent. of the average for the 25 EU member states. That is less than the 75 per cent. threshold, which is the basis on which eligibility for the convergence fund will be determined.

Wayne David: The hon. Gentleman has quoted the EUROSTAT figures, which do not take into account the most recent GDP figures from central Government. If the recent figures were taken into account, they would show that the GDP in West Wales and the Valleys has risen considerably.

Adam Price: That is all the more reason why the decision to award convergence fund status should be made now. West Wales and the Valleys has a window of opportunity to achieve the highest level of European aid for seven years until 2013, as a result of which we would probably qualify for another seven years of transitional funding. We are discussing 15 years of the highest level of aid for my community and for the hon. Gentleman's community, which is why we urge the Government to ensure that a decision is made in June at the European summit meeting.

Wayne David: By simply discussing regional policy in an abstract sense, the hon. Gentleman is not taking into account other issues, such as the British rebate and the size of the whole EU contribution.

Adam Price: I am discussing the concrete fact that money is on the table for the hon. Gentleman's community and for mine. As elected Members from West Wales and the Valleys, it is our responsibility to make the case so that Wales gets that money.

Wayne David: The hon. Gentleman has said that some money is on the table. What money? The EU budget has not been agreed yet.

Adam Price: Precisely. We must obtain agreement to ensure that we obtain full value from the money that is available to us. At the moment, we qualify for the highest level of EU aid, but we will not get that money if the UK Government push the decision into their own presidency or beyond it into 2006. I am not the only one to take that view: when the Welsh Local Government Association met the European Commission recently, the Commission told it in clear terms that it is in Wales's best interests to ensure that a decision is made now.

Angus Robertson: May I warn my hon. Friend against the view that structural funds are "abstract"? Part of my constituency is in the Highlands and Islands, which was turned down for objective 1 status on the basis of flawed figures from the UK Office for National Statistics. The people of the Highlands and Islands know that regional support and objective 1 status are not abstract, but fundamental to the economic regeneration of many places.

Adam Price: I should emphasise that the Highlands and Islands will qualify for the second tier of regional funding, which the Commission propose and which the UK Government oppose. Parts of east Wales will qualify for the regional competitiveness and employment fund, and transnational projects in rural development areas, which have been valuable to rural communities throughout Wales and Scotland, will be lost to the UK. Our communities have a lot at stake, and it is our responsibility to make the case to the UK Government.
	The UK Government's position is obviously to impose a 1 per cent. ceiling, which will preclude current levels of regional funding, and to pursue the policy of re-nationalisation to which I have referred. If the decision were pushed from June to December—I am grateful to the leader of my party for picking up my notes—new figures, which will push West Wales and the Valleys above the 75 per cent. threshold, would be a realistic prospect. In that case, we would lose out on this historic opportunity to achieve a 15-year basis for long-term economic planning in West Wales and the Valleys.
	One of the benefits of European regional policy is that it allows regions at least seven years in which to develop a long-term strategy, whereas the Government can make only a three-year commitment.

Ian Davidson: The hon. Gentleman is being particularly generous in giving way—although if I were to drop my notes, I would not expect the leader of my party to come and pick them up. May I ask him why he has worded his amendment in this way? In general terms, I support the bit that he wants to add, but I oppose the deletion of the provision on the stabilisation
	"of the budget at no more than 1 per cent.",
	which is essential. Does he agree that in many ways his dispute is not with the British Government, but with the EU, which insists that structural funding should be the last element of the budget to be considered, because it is not willing to adjust the common agricultural policy? If it were willing to cut money from the CAP to leave money for structural funding, the hon. Gentleman's problem, and my problem in Glasgow, would be resolved.

Adam Price: I disagree with the Government, who have made their position clear. They see no future for structural funds in our communities, but structural funds are critical in my area, which is the point of the amendment.
	On the UK abatement, which the hon. Member for North Cornwall (Mr. Tyler) mentioned, I am an agnostic because its effect in Wales has been entirely negative. Wales has not had the full benefit of European structural funding, and some rural development programmes and the compensation arrangements for farmers in Wales were affected negatively by movement in the sterling exchange rate. We did not receive that funding, partly because the Treasury would have lost out if we had had more receipts and there would have been less for the UK abatement. The operation of the abatement so far has not always been to the benefit of Wales.
	My principal reason for drafting the amendment was to emphasise a principle. I agree with what the Commission has said in the past few days about the need to protect the notion of EU-wide structural funds. Last week, Commissioner Hübner outlined the case for EU structural funds and said that the seven-year programming periods allow regions to think strategically and to plan for the long term. That will not be possible if we have a repatriation, because we will then have only the three-year period of a spending review to plan financially.The way in which structural funds have operated has allowed capacity to build up at local and regional levels. Local ownership and regional capacity-building has been welcome.
	A third element is the raft of inter-regional co-operation, experience sharing, and networking, which have been positive and part of European regional policy from the beginning. According to the Commission's proposals, 4 per cent. of structural funds will be devoted to that element. That is critical, not just in the economic sphere but in spreading innovation, because one of the great virtues of the European Union is its diversity. We would lose that element if we lost structural funding, particularly the transnational programmes, in the UK. It is vital to continue to have structural funding available.
	Empirical data show that structural funding, particularly objective 1 funding, has been successful in most objective 1 regions. EU-wide regional policy was first proposed in the late 1970s because of a fear that member states had failed to promote a convergence agenda. Contrast that with experience in objective 1 regions whose economic growth in 1988–2000 was three times faster than in Europe as a whole. That is true in the Republic of Ireland, Spain and parts of Portugal, which had positive economic growth records during that period. The one exception is West Wales and the Valleys, which, despite achieving objective 1 status, does not have a good growth record so far.

Elfyn Llwyd: Is it not true that the reason for that is the slow start in getting things moving, including the various committees, and the absence of proper match funding from Westminster? I note that the hon. Member for Caerphilly (Mr. David) is arguing against further structural funds for Wales and his constituency. I wonder what he will say in his election mail-outs.

Adam Price: This is not the time to go into detail about the operational difficulties of the West Wales and the Valleys objective 1 programme, but there have been significant issues with the slow start to spending and what some people see as an overly bureaucratic and complex approach, which can be contrasted with the more strategic approach taken in other economic regions. West Wales and the Valleys region has seen a relative economic decline, contrary to the positive experience of other objective 1 regions. The available data show a further slide and it is vital that we have a second opportunity. We must learn from the failures of the past few years.

Paul Tyler: Does the hon. Gentleman agree that the stifling bureaucracy to which the Financial Secretary referred during a debate last year has been more evident in the relationship between Whitehall and our local communities than in Brussels? Whitehall has been the problem, not Brussels.

Adam Price: That is a good point. As I tried to argue a few moments ago, there is a powerfully enabling attitude and culture within the Commission on regional policy. It is all about grass-roots, bottom-up development to enrich and promote indigenous capacity. That has been powerful, but Wales could learn from the experience of Ireland and its identification of key strategic weaknesses in the Irish economy. Sectoral strategies and looking forward 15 years in terms of new technologies when they were on the distant horizon were key elements in Ireland's armoury and part of the reason for its powerful success. A similar strategic approach has been taken in some of the Atlantic arc regions, such as Portugal.
	We can learn the lessons, but the central issue is the need for a decision. West Wales and the Valleys region is eligible. We have a second tier offer for disadvantaged regions, but the 15-year window of opportunity must be grasped. We must press the Financial Secretary on whether the Government will put the interests of Wales first at the European summit in June, or will allow that opportunity to slip through their fingers. It would be a terrible waste of a massive opportunity to regenerate our communities and would impact on other funds such as the European agricultural fund for rural development. Projects such as Tir Gofal, Tir Mynydd and Tir Cynnal, which have been important in many rural communities, are at risk because of the Government's intransigence. It is vital to have an early decision in June, as timetabled, so that West Wales and the Valleys can benefit from its eligibility. That is the simple message behind the amendment.
	This is another historic opportunity for us. We did not think that we would have to have a second chance. It should not have been necessary because we should have had a successful programme that would have lifted our communities out of poverty. However, we are debating the matter day because of the failure and incompetence of the Labour Government in Cardiff. We should not be punished twice because of their incompetence and failure adequately to represent us in Brussels.
	We are among the poorest communities in the European Union. I am not proud of that and I want to change it. I do not want to go, cap in hand, to London or Brussels. I want a future for my community, as Ireland has. Ireland lifted itself out of poverty and it is incumbent on the Government to ensure that communities that successive Governments have failed—I accept that the fault lies not just with the Government, because it is a legacy of the devastation of the previous Administration—have the opportunity to help themselves. We need the funding and, from the bottom of my heart, I appeal to the Financial Secretary. It means so much to our communities. We need to mount a cross-party campaign. Will the Minister please heed the voices from Wales? We need a decision for our communities now.

Chris Bryant: I do not know whether I shall rise to the oratorical heights to which the hon. Member for East Carmarthen and Dinefwr (Adam Price) has just risen, but perhaps he will be able to calm himself a little over the next three quarters of an hour. I remind him that Members on both sides of the House feel strongly about the issue of poverty in the valleys communities and want to try to rectify the inadequacies of past policies across the whole of the last century, including the inequity on which much of the valleys' prosperity was built from the 1850s to the 1980s when the mines closed. However, I do not necessarily agree with him on the amendment. I shall return to some of the issues that he raised later.
	I shall start with a few comments about the gamut of papers before us. It is true that the financial prospects for the EU in the next few years will be challenged by several issues that the Union has not had to face before. The most dramatic of those issues is enlargement, which increased the population of the EU by 30 per cent. but its gross domestic product by only 5 per cent. The EU has always taken pride in trying to use structural funds and other measures to provide a measure of equity between the member states, and that will become a major challenge.
	Another issue, which was mentioned by my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) earlier, is that of asylum and border controls. It is true that one of the issues that most interests many people in this country is how the EU can assist in developing a strong asylum and immigration policy that recognises the importance of strong borders with neighbouring countries. The days when Britain could have bilateral agreements with France, with Spain, with Greece and so on are long past. If we are to   have a secure country, we must increase our co-operation through the EU, which will pose financial difficulties for the Union.
	The hon. Member for North Cornwall (Mr. Tyler) advanced an argument that he appeared to have lifted straight out of the Commission's document, and it was also mentioned by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody). That argument—that the EU gets to spend only 1 per cent. of GNI, whereas member states get to spend 45 per cent. of GDP—bears no weight at all. It is a fatuous argument and it undermines the Commission's document. After all, the Commission is not trying to create a superstate—[Interruption.] My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) is heckling me. Perhaps he is trying to persuade me to join Labour against a superstate. If so, I would be happy to join him, because I am opposed to a superstate. Indeed, I am probably more rigorously opposed to it than he is. However, I see that he has given up on that attempt.
	I was interested to note that the debate has brought out areas of broad agreement between parties. It is important that the message we send from the House this afternoon to the Commission and to other member states is that some of the things that we are saying have broad cross-party support, the most notable of which is the 1 per cent. ceiling on the budget. Some people think that if one ever says a word of criticism of the EU, one is by definition a bad European, but I do not accept that argument. Indeed, many of those who have most ardently and successfully campaigned for reform of the EU have been those who have believed in it more keenly than others.
	I agree that 1 per cent. is a sensible ceiling for the Commission's budget. I also believe that we need to be resolute in our attempts to reform the CAP. Some would argue that it is one of the most pernicious elements of the EU set-up, and I agree, but some use it to argue that we should not be a member. To those people I would simply point out that if we had not played Johnny-come-lately at the beginning of the European adventure, the CAP would not have followed the format that it has. It would have been better if we had been involved in the first drafting, rather than in attempts at redrafting. A Conservative Member claimed earlier that the CAP had been reformed in the past couple of years and that the Doha round was important in achieving another step forward. However, I think that we should start to reduce the percentage of the EU budget devoted to the CAP considerably.

Ian Davidson: rose—

Chris Bryant: Before my hon. Friend intervenes to ask me what figure I would put on that, I should say that I thought that all his interventions on other hon. Members to ask for precise figures were rather fatuous. The point is not the percentage of the EU budget, but the absolute figure—the amount of money. That is the figure that should fall.

Ian Davidson: In that case, can my hon. Friend tell me the absolute figure that should be spent on the CAP?

Chris Bryant: The amount should fall considerably. As I predicted, my hon. Friend attempted to entice me to give a precise figure, but our aim should be to reduce the absolute figure in real terms and not let it just rise with inflation.
	I also believe, as do all pro-Europeans, that we should be more resolute in our attempts to improve the financial transparency of the EU, to tackle fraud and to insist on financial discipline from the Commission. The idea of a 5 per cent. margin of manoeuvre, suggested by the Commission, would be wholly inappropriate, because it would set up an expectation of poor financial discipline before we even start the next seven-year period.
	Notwithstanding the unity in the House on the 1 per cent. ceiling, the CAP and the need to tackle fraud, several hon. Members have been too ideological and not pragmatic enough in their approach to the issues. One instance is the question of whether aid should go always to the poorest countries. Of course it is self-evident that we should try to ensure that the international aid provided by this country or through the EU should go to the poorest countries, but it should not be done on a straight mathematical model, for various reasons. For example, we should bear in mind governance issues. We should give aid only where it will make a significant difference. That may not be in the poorest countries, because countries that have poor records of governance and refuse to improve their human rights records should not be rewarded with money that may end up in the pockets, not of the poorest people in those countries but of the oligarchies that run them. The ideological obsession with simply giving money to the poorest countries is flawed.
	In some areas, we may also wish to use international aid budgets to reinforce political objectives. I raised that point earlier with my hon. Friend the Financial Secretary. Our neighbourhood programme policies may entail some spending of money in other areas, most notably in the Maghreb, if we are to try to ensure our internal security within this country, and across the EU. We should also look at the policies that we wish to develop in the Balkans and the Palestinian Authority. In all those cases, the mere mathematical model that all EU aid money must go to the poorest countries is mistaken.

Mark Hendrick: I agree with most, if not all, of my hon. Friend's comments about the criteria for giving aid. However, many opponents of the current system criticise it on the basis that much of the aid goes to countries that were previously part of the European colonial empire, and it is true that African, Caribbean and Pacific—ACP—countries seem to benefit quite well. What is his view of the EU's relationship with those countries?

Chris Bryant: I entirely agree with my hon. Friend in that I should like us to be far more effective in trying to ensure that the richest countries in the world, many of which are members of the European Union, contribute more in international aid and do so not only in those countries with which they have historical links, but in areas where they can be most effective, where there is good governance, where there are human rights, and where they can lever in not only significant improvements in people's quality of life in terms of trying to meet the millennium development goals, but significant improvements across a whole region. On the whole, that will be better achieved with a strong EU aid budget than with a minimalist one; otherwise, countries such as France and Belgium are most likely, in their bilateral aid agreements, to contribute to countries with which they have historical ties. If our main objective in terms of an international aid budget is to try to ensure that all the aid that flows out of the EU to other countries goes towards making the biggest difference to their poorest people, we will need a significant EU aid budget.

Mark Hendrick: rose—

Chris Bryant: My hon. Friend seems to be wobbling.

Mark Hendrick: I am not sure that I would call it wobbling. What would my hon. Friend do about our agreements with West Indian countries on trading bananas, which were traditionally traded with the EU as a result of previous relationships with the ACP countries and world trade disputes with the United States? Those islands may not be poor in relation to African countries, but the disappearance of their only industry, which may be bananas, would make them much poorer.

Chris Bryant: My hon. Friend is enticing me into a debate on trade instead of EU finances. Let me cite the example of the disaster relief work in which different countries around the EU have been involved. In the Caribbean, for instance, countries such as France, Germany, Belgium and Holland will often work only with the individual islands with which they have historical links, whereas a more concerted effort between all the different countries would probably be far more effective. I still hold to the view that although, in the main, we should try to increase the percentage of EU aid that goes to the poorest countries—I respect the work that the Government have been doing on that—it will still be necessary to consider the mathematical equations of poverty in arriving at the decision on where the money should go.
	We have heard an excessive amount of ideology this afternoon, including the hyper-inflated peroration of the hon. Member for East Carmarthen and Dinefwr [Hon. Members: "Jealousy."] It might be envy, but it could not possibly be jealousy. The hon. Gentleman should not be ideological about structural funds. Ultimately, I want to ensure that the economy in my constituency is resuscitated after the decades of difficulties that we have experienced. The recent report by Sheffield Hallam university is a rude awakening for those who look at the south Wales economy and see, in many areas, greater growth than there is across the rest of the UK and significant improvements in the unemployment level, which in my constituency is only marginally ahead of the UK average. That is all well and good, but the truth remains that in other areas with objective 1 status jobs have been replaced much more significantly and effectively than in south Wales. That is partly why one in five people of working age in my constituency are on incapacity benefit. I am glad that the Government are working to address that. The issue of structural funds is not ideological—the point of principle is that we must ensure that we have programmes in place to resuscitate those communities.

Wayne David: Is my hon. Friend saying that the most important thing, contrary to what the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) says, is not whether the money comes from London or from Brussels but that extra resources are coming into West Wales and the Valleys, in the most effective way possible?

Chris Bryant: My hon. Friend has said almost word for word what I had written down on the piece of paper that I am holding, and I am grateful to him for doing so. There are certainly areas where a national investment will be more effective than an international investment, simply because layers of bureaucracy might be added. A Welsh bureaucracy topped by a Treasury bureaucracy and then a Brussels bureaucracy might not be in the best interests of delivering value for money in the communities that we are talking about.
	The hon. Member for East Carmarthen and Dinefwr missed a trick when he was intervened on by a Liberal Democrat Member, because the Liberal Democrats were the only people, apart from his party leader, whom he did not attack in his speech. He could have had a dig in that direction, because the Liberal Democrats' involvement in the objective 1 process when they were part of the Welsh Assembly Government gave us some of the hiccups and delays in the implementation of that funding in the valleys.

Elfyn Llwyd: Does the hon. Gentleman recall that the substantial shortfall every year in the match funding element coming from Westminster was one of the main problems in getting things moving? That is not just an allegation by us, but a proven fact. What he says about the coalition is right, but he did not mention the important annual element.

Chris Bryant: In my experience, a large number of factors made it difficult to get individual projects up and running—for example, the lack of understanding on the ground, certainly in my own community, about how to access funding, and the Plaid Cymru-run local authority's inefficiency in bringing forward projects.
	However, assigning blame is not important at this juncture. What is important is whether we should advance an ideological argument that says that we must have structural funds across Europe so as to provide money for Wales. Another ideological argument says that we should have no European structural funds because it is better to repatriate all structural funds to individual countries. I disagree with both those ideological positions. When Spain, Portugal and Greece joined the European Union, many people in Britain argued that that would be bad for us because it would make it more difficult to access funds from Europe and the investment that was going to those other countries would enable them to start to run ahead of us economically. What actually happened was that our trade with those countries grew dramatically—in the case of Spain, by 38 per cent. in a matter of three or four years. That was to the benefit of the UK economy. Similarly, some of the structural funds that might be used in countries such as Poland, Hungary, Estonia and Latvia will benefit us by increasing prosperity and opportunities for trade.

Richard Spring: Does the hon. Gentleman agree that the extraordinarily impressive taxation policies of the accession countries, including flat and very low taxes, are ultimately far more likely to generate growth and employment than anything else?

Chris Bryant: That is another ideological position.

Kelvin Hopkins: Another country in the European Union has one the most successful economies and high, progressive taxation: Sweden.

Chris Bryant: Indeed. For that matter, Spain has lower taxation than the UK. However, I think that the hon. Member for West Suffolk (Mr. Spring) tried to entice me into a general election conversation about whether we should be a higher tax or a lower tax economy.
	My point is that we should not be ideological about either repatriating all structural funds to individual member states or insisting that we must have structural funds so that, for example, Wales can get money. If there are structural funds, I stress to the hon. Member for East Carmarthen and Dinefwr that my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Caerphilly (Mr. David) and I will fight just as hard as him to ensure that some of the money comes to our communities. I am slightly sad and worried that the hon. Gentleman has intentionally designed his amendment to ensure that only members of the nationalist parties vote for it, so that he can use others' voting records as a party political tool, following the publication of his press release, which was doubtless issued earlier today.

Adam Price: I made it clear that my intention was to concentrate on what constituted a key issue for me. I hope that the hon. Gentleman does not accuse me of misleading the House.

Chris Bryant: I would not like to accuse the hon. Gentleman of anything.

Wayne David: Misleading the people of Wales.

Chris Bryant: As my hon. Friend says, perhaps the hon. Gentleman's rhetoric sometimes inadvertently misleads the people of Wales. If there are to be structural funds, it is important that the European Commission hears the voices of Members of Parliament from nationalist parties, Liberal Democrat parties and Labour parties, all arguing for the money to go to, for example, Welsh communities. It is important to build rather than dismantle that consensus.

Kelvin Hopkins: The general election campaign appears to be up and running in Wales if nowhere else.
	I support the Government motion, which takes a strongly critical tone about European financial arrangements. I support the tone, even if I would like to go further on specifics. For eight long years, I have been a member of European Standing Committee B. For eight of the past 10 years, we have received European Court of Auditors reports about the European Union budget's failure to add up or meet the Court's approval. I have made a speech on each occasion and I suspect that I have repeated myself because it is difficult after eight years to find something original to say. However, some things need repeating—I have said them in the Chamber as well as in Committees—about European finances.
	For years, there has been endless talk about reform of the CAP. Ministers have returned from Europe, waving pieces of paper and saying, "I have secured reform." Yet it has not really happened. While France remains happy not to be too critical, one can be pretty sure that nothing substantial has changed. I believe that the CAP should be abolished and that agricultural policy should be returned to member states. Each member state has a different pattern of agriculture. For example, I believe that we should choose to subsidise Welsh hill farmers. Their way of life is valuable and preserves our countryside and I would therefore be happy to subsidise them. I am not so happy to give massive subsidies to the multi-millionaire grain farmers of East Anglia.

Mark Hendrick: Is my hon. Friend suggesting that the UK should withdraw unilaterally from the CAP? What impact would that have on not only the grain farmers of East Anglia but farmers generally, the many poor farm workers and those who work in agriculture throughout the country? What impact would it have on any farmers in his Luton constituency?

Kelvin Hopkins: I did not suggest that we should withdraw unilaterally. I believe that we should have a domestic agriculture policy that may involve fairly heavy subsidies for some areas but not for others. It would be targeted to ensure that farm workers got proper wages and that we did not subsidise areas unnecessarily. I specifically mentioned Welsh hill farmers. However, that is a detail and my point is that each country should decide its agricultural policy internally. I ask our Ministers to propose that and argue the case in future. It will not happen this year and perhaps not next year but, in time, we must abolish the CAP. It has been a millstone round the EU's neck for a long time and we should get rid of it, start again and hand agriculture policy back to member states.

Angus Robertson: Fisheries?

Kelvin Hopkins: My views on the common fisheries policy are also well known.
	Minister after Minister in the Department for International Development has complained about the inefficiency and corruption in the aid budget, the fact that it is misdirected, that money goes missing and that it does not work. The Department for International Development is a model that other member states could follow. Whatever else we do in the world through our free trade policy in arms, we do a good job on aid. I therefore suggest that we should repatriate the aid budget to member states. We should not do it unilaterally, but propose it as a sensible way forward. We could then direct aid to the countries that we believed needed it—for example, those in sub-Saharan Africa.
	It is clear that structural funds will not operate to our advantage in future and that we will be bigger net contributors. Given that many poorer countries have joined the EU, it is sensible and natural that the richer countries such as Britain make net contributions to them. I hope that our Government will replace what is lost in European structural funds with various types of national and regional funding, which would ensure that areas of the country do not suffer by the loss of European funding.
	I hope that, when regional funding goes to parts of Britain, we might see notices with a little red rose and the words, "Donated," or given, or allocated, "by Britain'sLabour Government", instead of the little circle of yellow stars on a blue flag. I stress to my hon. Friend the Financial Secretary that previous Labour Governments have promoted such a regional policy. I did some work on regional policy funding when I was at the Trades Union Congress and in the 1970s, it genuinely worked. It reduces inequalities in growth, living standards and employment between regions. We should have more of that and there should be a more substantial national budget, too. We should not simply leave everything to markets, because they do not work without redistribution.
	We are considering substantial changes and it behoves all of us who take a critical standpoint to propose something that will work instead of what we have. On page 104 of the document that is before us, the Commission examines the possibility of a GNI—gross national income—based system, whereby countries would donate according to their relative prosperity. The Commission notes that
	"advantages of such a system would be that it would be simple and easy to understand, and gross contributions would correspond closely to member states' relative prosperity."
	That is a sensible way forward. Sadly, the Commission rejects it. We should go on pressing that case. We should get rid of some of the distorting, inefficient and corrupt systems and replace them with a system based on relative prosperity whereby we donate to a budget on which the poorer countries draw. Rich countries such as Britain would therefore be net contributors and the poorer countries that join would be net recipients. That should be accompanied by a strong internal regional policy.
	I have made the case many times in the Chamber and in European Standing Committee B and I believe that it is sensible. However, we will get nowhere by tinkering at the margins and hoping that nobody notices that we are not changing anything much. We must propose a coherent, comprehensive and radical alternative for the future of Europe. I envisage our going forward on the principles that I outlined.

Ian Davidson: It gives me great pleasure in a European debate to speak enthusiastically in favour of the Government's policy. Indeed, I think that I am probably more in favour of the Government's policy on this matter than the Government are.
	I take as my starting point the Minister's comment that the EU Commission was proposing a 34 per cent. increase in expenditure. If such an increase were proposed by any local authority anywhere in the country, or by any other body or organisation, there would be an enormous scandal involving accusations of overspending. That is what should be happening in this context. The European Union's proposal to spend 34 per cent. more in the next year demonstrates that there is clearly no internal self-discipline in that organisation. In those circumstances, the Government should do as much as they can to restrict that expenditure to a reasonable level.
	Others have already touched on various aspects of EU spending, and I want to make two particular points in that regard. The first relates to extravagance. The waste, extravagance and corruption of the European Union are well known to all of us. I speak as a member of the Public Accounts Committee, which has been involved in studying this matter for many years, and that case is irrefutable. My second point relates to misdirection. The case that far too much is spent on the common agricultural policy has been clearly made and is similarly irrefutable.

Chris Bryant: Will my hon. Friend give way?

Ian Davidson: Yes! I am happy to give way to my colleague.

Chris Bryant: How much precisely would my hon. Friend like to spend on the common agricultural policy, in either absolute or percentage terms?

Ian Davidson: I welcome that question and I am prepared to give my hon. Friend a straight and unequivocal answer: nil. I am in favour of the abolition of the common agricultural policy. If there is to be support for areas with a substantial element of agriculture or for areas with regional needs, it should be given through a regional policy. The agriculture and food production industry does not require, and should not receive, subsidy, for all the reasons that we have discussed in other debates, such as the CAP's impact on and destruction of the third world, and the extent to which the policy acts to transfer money from poor consumers in my area, whose food is priced up, to wealthy landowners and farmers in other parts of the country while depriving the third world of the valuable income that it needs.

Mark Hendrick: Over what period would my hon. Friend expect expenditure on the CAP to fall to zero? If it did not fall to zero over that period, would he be in favour of withdrawing the UK from the European Union? [Interruption.]

Ian Davidson: A suggestion has been made that it should happen in 10 minutes, but that seems unrealistically speedy. We should go into negotiations with our European colleagues and see what progress can be made towards that goal. It would be unreasonable in the circumstances to set a finite timetable. We should not bog ourselves down in that kind of discussion. I suspect that, like many others, my hon. Friend believes that the CAP is effectively unreformable, that we simply have to put up with it, and that it must remain a bottomless pit into which money is poured. I do not take that view; I believe that drastic reform is needed.

Doug Henderson: I know that my hon. Friend is an experienced political negotiator. What kind of response would he expect his views to receive from European countries, particularly France and countries dominated by parties socialistes?

Ian Davidson: My hon. Friend is too kind; his negotiating skills are probably far greater than mine, since he honed them in the back rooms of the GMB and elsewhere. But when did he ever go to an employer with a demand for an increase in anything that was beneficial to his members without initially being met with a refusal? It is the process of negotiation that leads to breakthroughs and brings us together.
	Further to my points on the extravagance and misallocation of EU budgets, we have discussed the question of good governance in relation to trade and aid—aid in particular. If we applied to the European Union the standards of good governance that we seek to apply to the third world, we clearly would not continue to pour enormous amounts of money into the European Union in the way that we do. We must start to apply standards of good governance to the European Union as well. We ought to say, "No more money until there is reform."
	As I said earlier, I support the Government's policy with a skip in my step and joy in my heart. I very much welcome the Minister's statement that—as I understood it—the British Government were in favour of stabilising the EU budget at no more than 1 per cent. and that they would veto the proposal unilaterally if that position could not be agreed. It was noticeable that the main Opposition party also agreed with that. I regret, however, that the Liberal policy on this issue—as on so many others—was entirely unclear to me. The Liberals need to make it clear whether they are prepared to see the EU budget rise by more than 1 per cent. I am waiting to see whether there is any flicker of life on the Liberal Benches; I see that there is not. I regret also that the nationalists tabled an amendment that would have deleted the 1 per cent. stricture on the Government. I waited to hear whether they supported that policy, but I was disappointed. I recognise that they perhaps made an error in the way in which they phrased their amendment, but they could have covered the issue in their speeches. However, we are left to presume that they are quite happy to see the EU budget grow and grow, a bit like Topsy.
	The Government were perhaps not as clear as I might have wished on the question of protecting the rebate. I understand the general principle that they will be willing to use the veto if the rebate is not protected, but I was unclear as to the scale of the rebate that was being sought. Many of us remember, from our days working in local authorities and elsewhere, the various skills associated with creative accountancy. I would not wish to hear the Government argue that they had preserved the form of the rebate when the figure had in fact been whittled away completely. It is clear that, at present, we are the largest net contributor to the EU budget—that has been the case for a number of years, as far as I can see from recent figures—and on the basis of the EU Commission's proposals, that would continue to be the case. The Government need to tell us what their bottom line is, and to reveal the figure beyond which they are not prepared to go.
	My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) talked about the need for co-operation and joint spending. His key point related to whether the EU adds value. There seems to be a whole range of areas in which it does add value to spending by individual countries, and in which it adds value to working together through its structures. However, in a whole range of areas, such as aid and the CAP, the EU actually destroys value. For example, when we compare the amount of money that goes into the EU for third-world aid with the benefits that flow out in terms of spending on the ground, we see that the output is less than the input. In those circumstances, the Government ought to be much more vigorous in arguing our case than they have been until now. This debate has tended to be about absolute figures, but it ought also to be about best value, and about whether value is being added by the EU. It is clear that, in too much of its expenditure and in too many of its areas of interest, higher value is not being added. In those circumstances, the Government should seek to reduce, minimise or eliminate expenditure entirely.

Stephen Timms: We have had an interesting debate that has shown the significance of the next financial perspective for the future direction of the European Union. I have been heartened by the wide support expressed for my contention that a 1 per cent. budget is realistic and affordable, and—with reform and reprioritisation—more than enough to meet fully the needs of an enlarged EU.
	The continued inefficiencies and inequities on the expenditure side of the EU budget and the resulting unfairness of the UK position mean that the UK abatement remains fully justified. It is not up for negotiation; we are not proposing changes to the way it is calculated. Without the abatement, UK contributions since 1995 would have been at least 12 times more than those of countries of comparable wealth. We reject also the Commission proposals for a general correction mechanism, and for a 34 per cent. increase in the EU budget at a time when member states are having to take pretty tough fiscal decisions about their own spending at home.
	A number of Members asked me about the timing for decisions on all this. Negotiations so far have shown increasing support for the position that the UK, among a range of member states, has taken. I think we will gather more support as the negotiations progress, and I am confident that we will secure our priorities in the best interests of the whole EU.
	Specifically on the question about the timetable and the deadline asked by the hon. Member for West Suffolk (Mr. Spring), we are happy to work towards a June political agreement—that is, at the end of the Luxembourg presidency—but getting the right deal for us is more important than hitting any particular date, so we are certainly ready to take this work forward in our own presidency if no deal is agreed in June.
	The hon. Gentleman gave the impression that ground had been lost since last year's debate, but I do not think that that is true at all. Indeed, the reverse is the case and we have gathered growing support for the position we have taken. He referred to some figures and suggested that the Commission, after the initial proposal of about 1.26 per cent. of EU GNI, came forward with an even higher figure of 1.3 per cent. That is not correct. I think he has misunderstood some figures—I do not blame him for misunderstanding some of the detail—that appear on page 167 of the bundle of documents. They indeed include the figure of 1.3 per cent., but he needs to know what that is.
	That figure refers to a maximum budget drawn from the suggestions of all the member states in responding to the Commission's proposals. So, those proposals come from member states, not the Commission. The same table shows the minimum budget drawn from the same source, which is 0.82 per cent. of EU GNI. We see there the suggestions coming from the member states, which lead to a range of budget values between 0.82 and 1.3 per cent. That underlines the fact that our 1 per cent. package is perfectly credible in view of the concerns of the member states, as well as affordable.
	There has been some discussion of the common agricultural policy. An agreement was reached at the October 2002 European Council, which provided for a slight real-terms cut in CAP expenditure. We regard those ceilings as maximums, not targets. We want to continue to work to ensure that CAP spending comes below the ceilings. My hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) will agree with last July's trade and investment White Paper, where we said that
	"there is no logical reason why agricultural products must be treated in a different way from industrial goods. Our long-term goal will be to abolish progressively, as for industrial goods, all trade-distorting agricultural subsidies".
	The hon. Member for North Cornwall (Mr. Tyler) asked where we were when CAP reform was being debated. Of course, we were, as always, playing a key role in an important decision, which was breaking the link between tax-funded subsidies through the CAP and production. That decision on decoupling was a big step forward.
	There has been a good deal said in the debate about the future of EU regional policy. Our approach to EU structural and cohesion funds would provide for greater solidarity and better effectiveness by focusing funds on the least well-off member states, where they would have the greatest effect. My hon. Friend the Member for Luton, North (Mr. Hopkins) suggested that only previous Labour Governments had taken this position, but we are strongly committed to a vigorous regional policy. However, three quarters of all regional regeneration funding already comes from this Government, rather than from the EU, so we have made the commitment that if our reform proposals are agreed, domestic regional policy spending will be increased so that the UK's nations and regions do not lose out.
	I say to the hon. Member for East Carmarthen and Dinefwr (Adam Price) that we pay €1.60 for every euro of structural funds we receive. In any scenario, the amounts coming to the UK are bound to be less in future, but his argument seemed to be that it is necessary to keep EU structural funds in place to protect his constituents from the danger of a future Conservative Government. The logic is that he should be urging people to vote Labour to avoid that disastrous outcome.
	The hon. Member for North Cornwall made an interesting speech that was undermined for me by his suggestion that the Government are not interested in Cornwall. Anyone who has seen the benefits of objective 1 funding in Cornwall knows that this Government have made the case for Cornwall and promoted the programme whose benefits are being experienced.
	My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) made an excellent speech, setting out the value of the EU and the need for budgetary discipline within it—not assuming that every need that arises requires extra EU spending. As he said, we gain enormous benefits from our EU membership. I agree with what today's Financial Times quotes Sir Digby Jones as saying—that we should
	"exploit the 'very pro-British' mood in Brussels".
	He also criticises the Tories' policy on Europe as
	"potentially damaging to British interests".
	He characterised it thus:
	"Saying, 'well, I'm out of here', whether it is on separate issues or the whole thing".
	Sound budget management, clear focus on objectives and priorities—those can only improve the value of the EU's work. I commend the motion to the House.

Question put, That the amendment be made:—
	The House divided: Ayes 2, Noes 360.

Question accordingly negatived.
	Main Question put and agreed to.
	Resolved,
	That this House takes note of European Union documents No. 11607/04, Commission Communication: Financial Perspectives 2007–2013, No. 11741/1/04, draft Decision on the system of the European Communities' own resources and draft Regulation on the implementing measures for the correction of imbalances, No. 11745/04, draft for renewal of the Inter-Institutional Agreement on budgetary discipline and improvement of the budgetary procedure, and No. 11752/04, Commission Report: Financing the European Union—operation of the own resources system; supports the Government's efforts to refocus the European Community budget towards the Union's key priorities in line with the principles of subsidiarity and European Union value added and stabilise the budget at no more than 1 per cent. of European Union Gross National Income; shares the Government's concern over proposals for new flexibility instruments; opposes the Commission's proposals for a Generalised Correction Mechanism; and in particular supports the Government's view that the Commission's overall proposals are unrealistic and unacceptable.

House of Commons Members' Fund (Discretionary Payments)

Howard Stoate: I beg to move,
	That this House resolves that pursuant to section 4(4) of the House of Commons Members' Fund Act 1948 and section 1(4) of the House of Commons Members' Fund Act 1957, in the year commencing 1st October 2004 there be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948:
	(1) The whole of the sums deducted or set aside in that year under section 1(3) of the House of Commons Members' Fund Act 1939 from the salaries of Members of the House of Commons; and
	(2) The whole of the Treasury contribution to the Fund in that year.
	The motion has been signed by Members on both sides of the House who, as managing trustees, share with me the responsibility of administering the House of Commons Members' Fund, a benevolent fund for former parliamentarians and their widows and widowers. Its main purpose is to make payments, at the discretion of trustees, to former Members and their dependants—having regard to their circumstances—and to make payments as of right to former Members of the House of Commons who were Members before the parliamentary contributory pension fund was established, and to their widows and dependants.
	Two motions have been tabled, Mr. Deputy Speaker, and I think it would be helpful if—with your permission—I dealt with them at the same time. The first gives effect to the appropriation of Members' own contributions and the contribution from the Members' estimate to provide funds for discretionary awards. The second provides for inflation-linked increases in payments to beneficiaries of the fund.
	The second motion is complicated. For reasons that are not entirely clear to the current trustees, the House has fallen out of the habit of passing the necessary motions for the Members' fund. Similar motions were last tabled by the right hon. Alf Morris, now Lord Morris of Manchester, in March 1994. I am privileged to follow in the footsteps of such a campaigner for the rights of the disadvantaged and disabled. Unfortunately, it seems that the annual resolutions required by legislation have not been put to the House since that was done by Lord Morris 11 years ago—almost to the day. Along with the other trustees, I now wish to put that right.
	The beneficiaries of the fund are elderly former Members or their surviving spouses. Many of them, unlike current Members, are not entitled to the benefits available from the parliamentary contributory pension fund because they left the House before 1964. Others—widows and widowers of former Members—have their PCPF benefits topped up. Still others receive discretionary payments because of hardship and their personal circumstances. The discretionary payments can be recurring to improve a person's standard of living, or they can be one-off grants to improve quality of life—perhaps to facilitate a minor home adaptation.

David Taylor: When the then Member for Bassetlaw left the House, he set up an organisation to cater for the needs of former Members and their widows and widowers. It seemed clear from an article published at the time that little effort was being made to establish where Members went after leaving the House, or where their widows or other dependants went. Is the fund reactive, or will it seek out those who would benefit from its assistance?

Howard Stoate: That is a good point. The fund will seek out people in hardship when that is possible, but it relies very much on existing Members who may have access to the details of former Members. As I shall make clear later, we have improved access to the fund, and also improved the information that can make claiming easier than it has been in the past.

Eric Martlew: As a fellow trustee, my hon. Friend may recall that we recently advertised in a journal for former Members. We wanted to alert people who would not know of the fund. But I think that the proposed system would be very effective, and should operate annually.

Howard Stoate: My hon. Friend is right, and I hope that the fund will continue to operate proactively as far as possible.

Tam Dalyell: I have been a Member of Parliament for a long time, and I thank the trustees for the work that they do on behalf of us all.
	I agree with my hon. Friend that it is often difficult to seek people out. It is less a question of pride than one of shyness, or not wanting to approach the fund. It should be made clear that there is nothing dishonourable in such an approach from people who, in many cases, are in need.
	I am sometimes taken aback and embarrassed when old colleagues or their relatives are in financial difficulty, given that, morally and legally, they are certainly entitled to benefit.

Howard Stoate: I am grateful to my hon. Friend for his great wisdom and knowledge. During his time in Parliament, he has done a great deal to bring such matters to our attention. He is right: some of the cases brought to us involve people in incredible hardship, living in straitened circumstances on very modest incomes. Not until they are hit by a disaster such as a leaking roof or a central heating breakdown and find that they simply cannot pay the bill do they even consider applying to the fund. We are anxious to track down such cases when that is possible, and to help however we can. That is one reason for the motion: we must regularise our affairs to ensure that we keep up with the times as far as we are able.
	The fund currently has about 120 beneficiaries in any one year. The average value of the recurring payments is less than £2,000 per annum. A handful of one-off grants are made each year, with an average value of only about £5,000. As my hon. Friend implies, relatively small sums can make a great difference in some circumstances.
	The first motion gives effect to appropriation of the contribution that all Members make from their salaries each month, and the sum of £215,000 from the Members' estimate, referred to in the motion as the Treasury contribution. The appropriations will enable the trustees to continue discretionary awards to ex-Members and their dependants, having regard to individual circumstances.
	The second resolution achieves three things. First, it confirms the current rate of benefit for those in receipt of recurring payments from the fund. The increases are linked to inflation, and the amounts for April 2004 are some 2.8 per cent. higher than for the preceding year. Secondly, it regularises the position in respect of the years between 1995 and now by applying the relevant inflation figure each year to the benefit amounts. I should add that no beneficiaries have missed out on their increases during that period. Thirdly, paragraph (6) looks forward to future years, allowing an inflation-linked increase to be applied without further reference to Parliament. The trustees see no need to ask the House each year to approve inflation-linked increases for such a straightforward matter.
	The fund is governed by a variety of Acts that stipulate the basis on which payments can be made, and the amounts payable. Some payments are known as "as of right payments"; others are awarded at the trustees' discretion. This motion and the increases mentioned therein apply to the different types of payment allowable. It is an over-complex legal arrangement—a point that the trustees will consider at their next meeting—and that might be one reason why former Members are sometimes put off applying to the fund. The current legislation is extremely complicated; indeed, even the trustees have great difficulty in interpreting the rules. The system needs regularising and the trustees hope to do so in the coming period.
	The trustees are very appreciative of the fact that Members continue to bring to their attention information on the needs of former Members and their dependants now living in straitened circumstances. In addition, we have taken steps to improve the information available on the fund, so that it might more easily come to the attention of former colleagues. The trustees have also improved the application process, so that fairness and consistency are built into the system.
	Finally, I pay tribute to my fellow trustees for the work that they undertake on the fund's behalf, particularly the chairman, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who unfortunately cannot be here this evening. I also thank the staff of the operations directorate of the Department of Finance and Administration, which handles the fund's administration. I want to thank in particular Terry Bird, secretary to the fund, who has given me enormous help in preparing for tonight's debate, and Ms Jane Trew, who deals with all the applications received with considerable skill and tact and brings them before the trustees for their consideration.

Oliver Heald: I just want briefly to welcome the motions, which clear up some anomalies, and to congratulate my right hon. Friend the Member for Hitchin and Harpenden (Mr.   Lilley), chairman of the trustees of the Members' fund, on bringing them before us. The trustees put a great deal of hard work into the important task of looking after former Members and their dependants, sometimes confronting the difficulties that the Father of the House mentioned earlier.
	As Chairman of the Audit Committee, I should point out that we welcome the very co-operative approach taken by the Members' fund, particularly in respect of our external Members. I know that a further meeting is planned shortly, and with those few words, I welcome the motions, which we of course support.

Paul Tyler: On behalf of my right hon. and hon. Friends, I too would very much like to congratulate those of our colleagues who do such valuable work for the trust. I am also grateful to the hon. Member for Dartford (Dr. Stoate) and his colleagues for providing us with a very good explanatory memorandum.
	I want to draw attention to one important point. Given that the parliamentary contributory pension fund has been in operation for some 40 years, one would hope that lack of knowledge about it will be a diminishing problem, but it is clear that a number of would-be beneficiaries might continue to be unaware of the trust's nature and remit. It is very welcome that the trustees have recently taken the initiative of publicising the nature of their work and its applicability to certain circumstances. The memorandum describes as an "oversight" the fact that there have been no resolutions since 1994 for the purposes of regularising regular or one-off payments, and I hope that the oversight has been put right, not only for the current year. Perhaps someone can explain whether this debate will have to be an annual event, or whether, as a result of these motions, we have given permanency to the new arrangements.
	I say again that we are grateful to those Members of the House who give their time and expertise to what is obviously an extremely valuable exercise.

Howard Stoate: I should make it clear to the hon. Gentleman that the first motion will have to be put before the House annually until we regularise the current legislation, which does not allow us to make future changes without coming back to the House each time. The second motion, on uprating, can be regarded as a one-off and need not be debated in future years.

Paul Tyler: I am grateful to the hon. Gentleman for that intervention and for his contribution this evening.

Phil Woolas: I add the Government's support for these motions and echo the comments of the shadow spokesmen by thanking, on behalf of the whole House, the Members' fund and in particular its chairman, the right hon. Member for Hitchin and Harpenden (Mr.   Lilley). I also thank my hon. Friend the Member for Dartford (Dr. Stoate) for moving the motion so eloquently and for explaining a very complex matter in simple terms, so that we could all understand it. These funds are important to their recipients, many of whom are elderly and vulnerable. It is also important that we do things properly, and the House will want to thank my right hon. Friend the Leader of the House for ensuring that the time requested by the trustees for this debate was made available.
	This is one of those moments when we can reach a consensus, and with that in mind I am happy to support the motions.
	Question put and agreed to.
	Resolved,
	That this House resolves that pursuant to section 4(4) of the House of Commons Members' Fund Act 1948 and section 1(4) of the House of Commons Members' Fund Act 1957, in the year commencing 1st October 2004 there be appropriated for the purposes of section 4 of the House of Commons Members' Fund Act 1948:
	(1) The whole of the sums deducted or set aside in that year under section 1(3) of the House of Commons Members' Fund Act 1939 from the salaries of Members of the House of Commons; and
	(2) The whole of the Treasury contribution to the Fund in that year.

House of Commons Members' Fund (Uprating of Benefits)

Resolved,
	That this House resolves that pursuant to section 3 of the House of Commons Members' Fund Act 1948 and section 2 of the House of Commons Members' Fund and Parliamentary Pensions Act 1981 ('the 1981 Act'), the amounts which may be or are to be paid out of the House of Commons Members' Fund specified in the First Schedule to the House of Commons Members' Fund Act 1939 ('the 1939 Act') and in section 2 of the 1981 Act respectively, shall be increased as follows:
	(1)   in paragraph 1 of Schedule 1 to the 1939 Act, as amended, (limits on discretionary payments to former Members of the House of Commons):
	the amount of £4,574.35 shall be substituted for £3,554;
	the amount of £8,444.66 shall be substituted for £6,561;
	the amount of £8,806.34 shall be substituted for £6,842; and
	the amount of £12,676.65 shall be substituted for £9,849.
	(2)   in paragraphs 2 and 2A of that Schedule, as amended, (limits on discretionary payments to the widows and widowers of former Members of the House of Commons):
	the amount £2,858.65 shall be substituted for £2,221;
	the amount of £6,728.96 shall be substituted for £5,228;
	the amount of £5,504.93 shall be substituted for £4,277; and
	the amount of £9,375.24 shall be substituted for £7,284.
	(3)   paragraphs (1) and (2) shall have effect from the date of this Resolution.
	(4)   with effect from the dates there specified, the amounts set out in the attached Schedule shall be substituted for the amounts mentioned in section 2(1) of the 1981 Act, as amended, (payments to eligible former Members of the House of Commons who have not been Members since 15th October 1964 or to their widows or widowers).
	(5)   on each 1st April, from 2005 onwards, the amounts of the limits applicable to payments under section 1 of the 1939 Act and of the payments specified in section 2 of the 1981 Act shall be increased by the relevant percentage and the amounts in the said sections 1 and 2 shall be substituted accordingly.
	(6)   the relevant percentage to be applied each April is the percentage change over 12 months in the retail price index as at the previous September.
	
		
			  
			 The Schedule   
			 Effective date Former Member'srate Widow's/Widower'srate   
			 1st April 1995 £2,116.00 £1,323.00 
			 1st April 1996 £2,198.64 £1,374.60 
			 1st April 1997 £2,244.84 £1,403.52 
			 1st April 1998 £2,325.72 £1,454.16 
			 1st April 1999 £2,400.12 £1,500.60 
			 1st April 2000 £2,426.52 £1,517.16 
			 1st April 2001 £2,506.56 £1,567.20 
			 1st April 2002 £2,549.28 £1,593.84 
			 1st April 2003 £2,592.62 £1,620.94 
			 1st April 2004 £2,665.21 £1,666.32 
		
	
	—[Dr. Stoate.]

DELEGATED LEGISLATION

Mr. Deputy Speaker: With the leave of the House, I will put motions 6 and 7 together.
	Motion made and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Social Security

That the draft Social Security (Intensive Activity Period 50 to 59 Pilot) Regulations 2005, which were laid before this House on 2nd February, be approved.
	That the draft Social Security (Intensive Activity Period 50 to 59 Pilot) (No. 2) Regulations 2005, which were laid before this House on 2nd February, be approved.—[Paul Clark.]
	Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Protecting the European Community's Financial Interests

That this House takes note of European Union Documents No.   OJ C 293, the European Court of Auditors' 2003 Annual Report, No. 14549/04, Commission staff working paper: Complementary evaluation of the activities of the European Anti Fraud Office (OLAF), No. 11981/04 and Addenda 1 and 2, Commission Report: Protecting the Communities' financial interests and the fight against fraud—Annual Report 2003, and No. 11890/04, Commission Communication: Protecting the Communities' financial interests—Fight against fraud—Action Plan for 2004–05; and supports the Government's promotion of measures to improve financial management of the Community budget and to reduce fraud against the European Community's financial interests.—[Paul Clark.]
	Question agreed to.

Mr. Deputy Speaker: With the leave of the House, I shall put motions 9, 10 and 11 together.

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Wednesday 9th March, notwithstanding the provisions of paragraph (3)(a) of Standing Order No. 54 (Consideration of estimates), consideration of the Estimates set down for that allotted half day may be proceeded with, though opposed, for three hours, when proceedings shall be interrupted unless previously concluded; and on the interruption or conclusion of the proceedings, as the case may be, the Speaker shall proceed to put the questions which, under the provisions of paragraph (5) of Standing Order No. 54 and of paragraph (1) of Standing Order No. 55 (Questions on voting of estimates, &c), would otherwise fall to be put at the moment of interruption .
	Ordered,
	That, at the sitting on Thursday 10th March, the Speaker shall put the Questions necessary to dispose of proceedings on the Motion in the name of Mr Peter Hain relating to Support for Members who have chosen not to take their seats not later than three hours after their commencement; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—[Paul   Clark.]

SITTINGS OF THE HOUSE

Ordered,
	That, at the sitting on Thursday 10th March, the Speaker shall not adjourn the House until any message from the Lords has been received, any Committee to draw up Reasons which has been appointed at that sitting has reported, and he has notified the Royal Assent to Acts agreed upon by both Houses.—[Paul   Clark.]

PETITION
	 — 
	Turner and Newell Pension Fund

Tom Levitt: The Turner and Newell pension fund was in crisis last summer, since when a number of petitioners, including a disproportionately large number from my own constituency, have put together a petition consisting of approximately 5,000 names.
	The petition declares:
	The projected shortfall in the Turner and Newell pension fund will ruin the retirement of thousands of people.
	The Petitioners therefore request that the House of Commons urge the Government to take prompt action in order to address the problems with the Turner and Newell pension fund.
	And believe that the Government should consider every option available to them to resolve this crisis.
	And the Petitioners remain, etc.
	To lie upon the Table.

STEM CELL RESEARCH

Motion made, and Question proposed, That this House do now adjourn.—[Paul Clark.]

Ian Gibson: I am delighted to have this opportunity so early in the evening to raise the issue of stem cell research in the United Kingdom. As many Members will remember, we had several debates on this issue and thereby changed the legislation to allow such research to be carried out.
	In a recent interview, Sir John Chisholm, chief executive of the part-Government-owned company QinetiQ—formerly the Defence Evaluation and Research Agency, which essentially was a collection of secret, military-based research laboratories—called for an audit of the innovation potential of large Government purchases, in order to encourage Ministers and civil servants to think more imaginatively about procurement of new technologies and products. He believes that the Government's record in supporting science and science-based industry is falling somewhat short. For example, liquid crystal displays constitute a £10 billion industry, yet little of that is exploited in the UK. How do we make science and raw innovation reap their economic benefits?
	Although the UK has the ideas, it often lacks the enterprise to follow them through to market. The fear is that we will miss out on automatic breast scanners and many other new and exciting innovations in science. That is an example of the sort of circumstances that could pertain in stem cell research in this country.
	The key issue is not really about the use of embryonic stem cells, but about creating medicines to treat some of the most debilitating diseases afflicting our population—Alzheimer's, motor neurone disease, Parkinson's, muscular disorders and, indeed, cancer. It looks as though the first products will be trialled in a few years' time. There is some argument, but a lot of hope, about that. Those products are likely to be based on adult stem cells or manufactured immortalised stem cells.
	People often imagine or assume that projects emerge from basic research right away and move into the clinic for the benefit of patients. That, of course, is absolute nonsense. The translational research/scale-up/pre-clinical development stages all have to be carried out first, which can take some considerable time. Although there are few projects ready for the clinic today, many are ready to enter those earlier stages, and the costs associated with such translation steps are measured in millions of pounds. The assertion that there are no suitable projects is dangerously wrong and could be based on a misunderstanding of the steps required to bring the therapy to the clinic.

Tam Dalyell: My hon. Friend talks about millions of pounds, but there are tens of hundreds of millions of people whose health could be saved by these projects. On any felicific calculus, it would be hugely beneficial to all mankind if therapies were developed.

Ian Gibson: I am grateful to my hon. Friend and I absolutely endorse his comments. It has been proven time and again that scientific innovation has such knock-on effects.
	There is little or even no money for the translational steps from existing sources. One reason may be that such applied research does not generate much in the way of peer-reviewed publications and puts university departments—much of the work is being carried out at Newcastle, Edinburgh and so forth—at risk in research assessment exercises, which are concerned only with peer-reviewed journals. The consequences of that will, I believe, bear bad fruit. The money allocated to the Medical Research Council for stem cell research has been allocated to traditional hypothesis-driven research projects. We must move away from them.

Tam Dalyell: My hon. Friend referred to Edinburgh. He will forgive me for saying that I am rector of that university and chairman of the university court. I do not usually like flogging qualifications, but I am also a Fellow of the Royal Society of Edinburgh. In those circumstances, I want to underline the very considerable concern—the Minister should note that it is very considerable—that exists in Edinburgh about the biological and medical sciences at one of the greatest universities in Europe. We are deeply concerned about the subject that is being debated tonight.

Ian Gibson: I thank my hon. Friend and I have to confess that I too am a product of the excellent Edinburgh university system after a sojourn of some six years in that august city. As my hon. Friend knows, I often played at Easter Road stadium and at Tynecastle in the good old days before the huge wages and other problems that football now faces arose. The crowds were well behaved and it was unlikely that a chief executive would have run on to the pitch to exhort the crowd, "Let's be having you," and all the rest of it. I must say, incidentally, that Chelsea fans were excellent this week, shouting back at the Norwich fans, "You're going down with the soufflé," which I thought was rather apt in respect of the individual who had perpetrated an event at half-time a few weeks ago.
	Applied research and development projects are conducted and judged in a very different way from hypothesis-driven research. In consequence, it will not solve the lack of funding to give a large new sum to the MRC for applied research, as it is simply not set up to administer such big projects. The best solution is the stem cell foundation, set up by Sir Christopher Evans, which has attracted much interest in high places in government and Whitehall. The idea is to bring together the brightest and best across the relevant fields and skill sets. Those with experience in managing the project selection process, pharmaceutical and biotech companies, have an invaluable role to play. The stem cell foundation will have the ability and the desire to pick winners and back them all the way through to the therapies being offered to the patients—our constituents. We must act swiftly if we are to capture the fruits of British research for the UK. We are already being overhauled by other countries, including China and Korea, in this sector and the risk of brain drain to the US is increasing rapidly.
	On the other hand, Professor Pedersen of Cambridge university told me recently that he came to this country to work on stem cells almost immediately following the Government's decision to allow such research to take place here. He says:
	"As a stem cell refugee"—
	that sounds like a novel breed—
	"recently arrived in the UK, I am often asked whether I will return to my native California, now that they have voted to provide three billion dollars in funding for stem cell research. I answer that 'no, I am not ready to return to the US'. In my honest opinion, there is no guarantee that any State in the USA has the ability, or for that matter, even the intention, of providing treatments for UK patients with currently incurable diseases. There is simply too much opposition within the current administration to stem cell research to guarantee such an outcome."
	A recent UN declaration is designed to prevent stem cell technology in its 191 member states and it was good to hear our Secretary of State for Health say that that declaration was "non-binding" and would make "no difference" to the position of stem cell research in the UK. We have put some £16.5 million into stem cell research and set up a stem cell bank in this country, so we are ahead of the game. Several UK scientists are doing world-class research, including at the Roslin Institute, another fine place in Edinburgh, where Dolly the sheep was created. Sterling work is being carried out there, particularly on motor neurone disease.

Tam Dalyell: I should have mentioned that Ian Wilmut and others who work with him at Roslin are equally concerned. He and I wrote a letter to a Government Minister about the matter, and it is important to confirm that it is the Department of Health—and no other Department—that has the say in this matter.

Ian Gibson: I thank my hon. Friend and I shall leave it to the Minister to reply and provide us with the relevant detail on that.
	While all that has been going on in Britain, I have to say that a strong opposition has also developed. Some deeply resent the fact that we are creating embryos up to the 14-day stage in order to develop stem cell technology and they are infuriated by the stance that the Government have taken. We must be vigilant and maintain the excellence that we have already achieved.
	At the same time, we are talking to our European partners and trying to develop a European framework for stem cell research, but it is proving to be very challenging. It is somewhat complicated because of the differences between the regulatory and legislative positions—or, indeed, the lack of regulation—in the different countries. It is further complicated by what may appear to be inconsistent legislation in some countries, which permits abortion and in vitro treatment, but bans research on early embryos. There is a long way to go before we have effective European initiative and agreement on this matter. We must carry the flag and ensure that Britain is ahead of the field.
	One aspect that bothers many people is the European Union's fundamental objective in respect of research and its funding. It must allow co-operation between researchers from different member states, sometimes with different political perspectives, without fear of discrimination. In some countries, but not in others, the scientists will need some sort of protection. That is an important matter for European institutions such as the Commission and the European Parliament to take into account. Sometimes national laws prevent it, so we must actively find ways of ensuring that the necessary co-operation takes place. The solutions cannot be the responsibility of individual researchers. No one working in the EU should be punished or rendered liable to prosecution, restriction or discrimination if they participate in research, so long as it is undertaken in a country permitting such research. It is exciting that Europe is becoming involved and that scientists and medics across the world are starting to collaborate and fight the political pressures that discriminate against them.
	How can we move UK stem cell research into the clinic as soon as is humanly possible? Our first priority must be to do a better job with the resources we have. Once we have accomplished that, we must ask for the additional resources that we need to get the research into the clinic. There will doubtless need to be substantially greater UK investment in stem cell research, with planning now for 2006 and beyond. Investment is needed at all levels: in training, research supplies, experienced people, improved equipment and even, perhaps, new laboratories, to make the most of the initiatives and expertise already invested and hard at work.

Tam Dalyell: My hon. Friend referred to 2006 and beyond. Does he agree that the beyond part is very important? People in the field must have some certainty for five, 10 or even more years ahead. There must be some guarantee of continuity if their work is to be really effective.

Ian Gibson: I concur absolutely. We cannot always predict what will come from novel, blue skies-type research. We must encourage people to develop new ideas and to practise them. Politicians often seem to work through short-termism, whereas in science and medicine we know that we are in the game for a lifetime and beyond. That culture has not yet got through to the political process.
	I ask UK policy makers whether, having placed the UK flag in the continent of new knowledge, we are willing to defend it and to make the ongoing commitment that the new technological revolution will happen in this country. I hope that the answer will be yes.

Tam Dalyell: Normally, I do not muscle in on debates raised by my hon. Friends, but as there is a lot of time I trust the House will forgive me if I make a short speech.
	First, I must tell the Minister that her words tonight will be scrutinised by many informed and concerned people. The House of Commons may be pretty empty, but the Hansard report will go around university departments. I hope that the Minister will be able to say that stem cell research has the endorsement of the British Government and, in particular, that the decision will be made by the Department of Health, and no other Department.
	Secondly, as a Scot, may I ask how much discussion there has been with the Scottish Executive? The whole funding of the research is something of a grey area between the Treasury, the Department of Health and the Scottish Executive. I make no criticism of that. To the best of my knowledge, the system works pretty well, but I would like confirmation that the Department has been properly consulted.
	There is something else that bothers me. In the academic world in which we now live, there is enormous pressure to publish, publish, publish and to be accountable to this, that or the other. My hon. Friend the Member for Norwich, North (Dr. Gibson) will know of the dramatic and unusual case of a researcher who published nothing for eight long years, but at the end of the eighth year he published and was awarded his second Nobel prize. That researcher was Fred Sanger. With his prestige, he was in a position to do that, but let us for heaven's sake be patient in this field. Let us create a situation where there is not such a drive to show how much has been published and to judge people's work not on its quality but, alas, on quantity.
	It is important that funding is provided for people who want to carry out long-term research without their being pressurised to produce. That is a matter of cardinal importance. What Governments can do about it may be rather complex, but the problem must be tackled.
	Finally, if anybody has doubts about stem cell research they should go, as we all do in our constituencies, to Arthritis Care. They should see people who suffer from dementia or Alzheimer's. That will make the case for allowing the research to go forward. I hope that it is in no way threatened in our country.

Melanie Johnson: It is with pleasure that I rise to answer the Adjournment debate initiated by my hon. Friend the Member for Norwich, North (Dr.   Gibson). He has raised an important matter. It is also a pleasure to see that two other Members are in the Chamber, including the Father of the House. It is good to know that even at this hour people are interested in discussing the matter. My hon. Friend has worked energetically to ensure that science and technology are up in lights before the House, and I know that he takes a close interest in stem cell research.
	I have listened carefully to the points made by my hon. Friends the Members for Norwich, North and for Linlithgow (Mr. Dalyell). Before responding, as we have the luxury of a little extra time, I should like to remind the House of the regulatory and financial framework that the Government have put in place. I think that will help to demonstrate our firm objective to make the UK the envy of other countries in having a strict but enabling climate to foster this important field of research.
	We want the best possible medical research to take place in the UK, so we have put in place a widely respected regulatory system that may license specific research activities involving embryos if it is satisfied that that is necessary to undertake the research. That has allowed scientists in the UK to derive new embryonic stem cell lines using spare embryos that are not suitable for use in IVF—in vitro fertilisation—treatment. Over recent years, the House has held mature debates on that subject.
	Both my hon. Friends mentioned the Roslin Institute in Scotland. With the birth of Dolly the sheep at the institute, the ethical challenges of human cloning left the pages of science fiction and became stark reality. However, we confronted those challenges, and fulfilled a Government manifesto commitment, when we were one of the first countries in the world to ban reproductive cloning, under the Human Reproductive Cloning Act 2001. Anyone attempting that procedure in the UK will face prosecution with a possible 10-year prison sentence and a limitless fine. The strength of what we have done is shown by the fact that at the same time we recognised the enormous potential benefits that therapeutic cloning and stem cell research may bring.
	It does the House great credit that in 2000, after careful and wise debate, new regulations were passed to permit the use of the techniques of cell nuclear replacement—or cloning—to develop embryonic stem cells. The regulations mean that embryonic stem cell research takes place in this country under the strict control of the Human Fertilisation and Embryology Authority. The use of therapeutic cloning techniques will allow UK scientists new methods to develop cures for serious conditions such as diabetes, motor neurone disease, arthritis and dementia, to which my hon. Friend the Member for Linlithgow referred, and many others.

Tam Dalyell: I have confidence in the embryology authority, but there has been much press criticism of it. Do the Government have a view on that?

Melanie Johnson: When I recently had the pleasure of appearing before the Science and Technology Committee, chaired by my hon. Friend the Member for Norwich, North, I expressed the view, on my own and the Government's behalf, that we have considerable faith in the work that the HFEA has been doing and in its role. People are always challenging the authority's work, sometimes through the courts, and there are indeed some challenges on which it would be wrong for me to comment. It is a difficult field, but the regulatory structures and frameworks are working well. The HFEA has an important role in maintaining trust and credibility in the structures that the House has put in place.
	With the regulations that we have passed, UK scientists have the potential to use the new methods to develop cures for serious diseases. We are convinced that therapeutic cloning holds enormous promise for new treatments for serious degenerative conditions that are currently incurable, such as Parkinson's disease, heart disease and diabetes, which kill many millions of people a year. That was one of the contributory factors in a lot of the lobbying carried out by many organisations before the debates that took place in 2000 and 2001. That lobbying had a considerable influence on hon. Members, who rightly listened to the voices of the people who were dealing with the very difficult situations of millions of patients in this country and abroad.
	In May 2004, the Government created the world's first stem cell bank: the UK stem cell bank will act as a repository for all types of stem cells and ensure that they have been ethically and appropriately sourced. The bank also helps to fulfil our obligations to ensure that embryos will be used only for research into serious disease and when no other sources of material are available.
	In August last year, the HFEA granted its first licence for therapeutic cloning to a team at Newcastle university—in fact, that licence was first of its kind in Europe—and in February this year, a second licence to study motor neurone disease was granted to the same team at the Roslin Institute where Dolly the sheep was created. So the UK cloning story has come full circle, with a display of confidence in the UK regulatory system from our own stem cell researchers.

Tam Dalyell: Graham Bulfield, who was the director of the Roslin Institute and is now one of the vice-principals of the university of Edinburgh, was concerned at the time about the complexity of some of the regulations. This is difficult for the Government's lawyers, the parliamentary draftsmen and others, but is every effort being made to make the regulations as simple as they can be? Often it may be very difficult to make them simple.

Melanie Johnson: I suspect that my hon. Friend understands very well the difficulty of keeping things simple. We certainly try to do our best—I am sure that civil servants do, too—to ensure that things are as simple as possible, but that is not always easy, when dealing with lawyers, sometimes including parliamentary draftsmen, in my experience, although I shall probably receive many brickbats for saying so in the House. I am sure that, to be fair to those who draft our legislation, such things may be particularly difficult with this issue. Obviously, all hon. Members on both sides of the House have an obligation to ensure that such things are kept as simple and uncomplicated as possible.
	As my hon. Friend refers to the links with Scotland and Edinburgh, I should tell him that my noble Friend the Under-Secretary of State for Health in the other place deals with many of the day-to-day issues that relate to stem cell research, and I will draw his attention to the points raised about the links with Scotland and the Scottish authorities. Of course, although we are the lead Department, we are only one of a number of Departments. The Department of Trade and Industry is responsible for things such as research council funding, and I gather that the Foreign and Commonwealth Office also promotes UK stem cell research abroad. So a range of different Departments is involved. Of course, we try to keep in touch with colleagues in Scotland as closely as well can at all times.

Tam Dalyell: The Scottish scientific community appreciates the work of Lord Sainsbury, and indeed that of his officials. May I also make it clear that, if any brickbats are thrown at parliamentary draftsmen, they do not come from me? I was taught a very early lesson when I asked Harold Macmillan—the Prime Minister when I was first elected to the House of Commons—a question, and he replied by saying that he would send the parliamentary draftsman to explain how difficult it was, so for the past forty-two and a half years, I have known the difficulties of parliamentary draftsmen.

Melanie Johnson: I am glad that I have such distinguished friends on my side in what could be difficult fallout from the debate, I fear. May I tell my hon. Friend, however, that the noble Lord that I had in mind was Lord Warner? However, I entirely endorse his comments about Lord Sainsbury.
	Of course, the Government are committed to make our country a world leader in stem cell research. In fact, that commitment has been taken up repeatedly by the Prime Minister, who made a major speech in 2003, in which he said that he wanted to make this country the best place in the world to carry out stem cell research.

Rob Marris: The Government are doing a lot, as has been discussed tonight, but one measure of the Government's commitment, of course, is how much money is devoted to any field of endeavour. I realise from what the Minister has said that there is a multiplicity of programmes and perhaps a multiplicity of funding streams, but will she tell us roughly how much the Government spend each year on stem cell research? My understanding is that the sum needed, and what science would like to have, is about £90 million a year.

Melanie Johnson: I am grateful to my hon. Friend for his question. I was going to come to spending in a moment, but I can do so now if that suits hon. Members.
	In the 2002 spending review, the Government allocated £40 million to a major cross-Government investment in stem cell research. That will be made available in 2004–05 and 2005–06, with the following allocations: the Medical Research Council will receive £26 million; the Economic and Social Research Council, £1.8 million; the Engineering and Physical Sciences Research Council, £1.2 million; the Council for the Central Laboratory of Research Councils, £400,000; and the Biotechnology and Biological Sciences Research Council, £10.6 million.
	In January this year, the Department of Trade and Industry announced that it will contribute £4.9 million in funding to three specific projects in stem cell research. Those projects are led by the companies NovaThera, Stem Cell Sciences and ReNeuron. The respective aims of the projects vary from identifying factors that control the reproduction and differentiation of stem cells to developing high-throughput screening for drugs and stem cell technology for neurological diseases. The projects range in size from £2.2 million up to £4.5 million, with between five and eight collaborators in each consortium. The DTI funding for each project ranges from £1.2 million to £2.1 million. Although seven of the collaborative partners are based in London or the south-east of England, the other partners are spread throughout the UK—two are from the east midlands or the east of England, three from the north of England, three from Scotland and one from Wales.
	In the 2004 spending review, the Government announced £10 billion of spending on UK science over the period 2005 to 2008. In the new science spending allocations for the spending review announced today, the UK funding for biotechnology, including stem cell research and DNA-based medicines, via the Biotechnology and Biological Sciences Research Council, will rise to more than £1 billion over the next three years. There will also be an increase over the next three years to £1.5 billion for the Medical Research Council, including more than £440 million for clinical research into diseases such as those related to mental health, stroke, cancers and diabetes. The DTI said today that the Government's spending on UK science will be the largest ever investment in British science by any Government and that it will rise to more than £3.4 billion a year by 2008. We believe that that is a testament to our commitment to make the UK the best place in the world to do science.

Tam Dalyell: Those figures are impressive, but so is the generosity of several foundations, not least the Wellcome Trust. Are Ministers at ease with the co-ordination that takes place between the Government and the great and generous foundations? Is the research meshed to the best effect?

Melanie Johnson: I might not be the best person to answer that question in detail because stakeholders beyond myself, both in Government and outside, are involved. However, I can say that we are comfortable with the work that we have done. We are comfortable with the support that we have received from the Wellcome Trust, especially, and delighted with the work that it has done with us.

Ian Gibson: Does my hon. Friend agree that the best way forward is to ensure that charities, foundations and the industry work well with the research councils? There is a rumour that research councils often take umbrage if they think that other bodies are taking work away from them. Do we need to use political force to drive the bodies together?

Melanie Johnson: There will always be anxiety about relationships in different organisations and sectors, but I understand that things are generally working well. I am sure that the various Ministers with a strong interest in the matter in the key Departments that I mentioned, including the Department of Health, make every effort to ensure that the relationships go well.

Rob Marris: I realise that not all the research funding to which my hon. Friend refers comes from her Department. Can she tell me, either now or later, how much of the funding is spent on blue skies research—pure research? I appreciate that politicians sometimes find that difficult to justify. There is a circular argument when people ask why we fund such research, because we have to try to explain that there is no reason to fund it, in one sense, because if there was such a reason, the research would no longer be pure. However, pure research is vital to a modern economy. Can she give us an idea of the balance of research funding?

Melanie Johnson: I do not have a figure to hand that I can give my hon. Friend. However, I certainly accept—I am sure that Government do, too—the point that both he and my hon. Friend the Member for Norwich, North have made about research. Research for research's sake is often a starting point for the development of technologies that are useful for our society, so we must continue to support and respect that. We support that general argument in both word and deed.
	We are funding the UK stem cell bank, which is based at the National Institute for Biological Standards and Control. As I said, the bank is the first of its kind. It will hold all types of stem cells as a resource for researchers. It was launched on 19 May 2004 and will hold embryonic, foetal and adult stem cell lines. The bank recently received good manufacturing practice—GMP—accreditation following an inspection by the Medicines and Healthcare products Regulatory Agency, thus allowing therapeutic stem cell lines to be stored and distributed. In December 2004, the world patent office gave the bank the status of an international depositary authority under the Budapest treaty, which means that it can act as an official storage and distribution centre for patented stem cell lines.
	In November 2004, the Reproductive Genetics Institute, which is based in London and Chicago, announced that it would establish a stem cell bank in London with 18 embryonic stem cell lines that were created in Chicago. The cells are suitable only for research because they are not of a sufficiently high standard for use in patients. We support and encourage all activities that might turn stem cell research into real treatments. It is worth noting that the NIBSC bank alone will be able to store and supply clinical grade material for therapeutic use. We think that the work going on there is one of several jewels in the crown of stem cell research.
	My hon. Friend the Member for Norwich, North touched on the question of what is happening at UN level. As I have said, the UK has been totally opposed to human reproductive cloning and we were one of the first countries to ban it. At the same time, however, we have allowed therapeutic cloning. I endorse his point about the United Nations debate. I understand that more action will take place in the UN tomorrow. It is likely that a non-binding political declaration on cloning will be adopted. The UK has voted against the declaration thus far because it calls for the prohibition of all cloning, including therapeutic cloning. We have made it clear that that declaration will have no effect whatever on UK stem cell research. I gather that the matter has to go before the General Assembly—that might be happening tomorrow—so there are further stages to be completed.
	I was a little surprised that my hon. Friend did not mention the East of England stem cell network. It was set up with funding from the East of England Development Agency. It brings together key organisations involved in the important field of research, including the Cambridge University Hospitals NHS Foundation Trust. Given his interest in both East Anglia and stem cells and bioscience, I am sure that he will support and promote the network.

Ian Gibson: I apologise to the Minister, but I sit on that committee, so the matter must have escaped my mind. Our new chair is Mary Archer, so we will have a hard-hitting team to ensure that the east of England rises up to the excellence displayed by Edinburgh.

Melanie Johnson: I declare an interest in all things connected with the east of England, as an MP for that region. I thought I would give my hon. Friend an opportunity to mention his ongoing interest. I gather that the network will be launched at the Sanger institute in Hinxton, Cambridge, tomorrow.
	My hon. Friends the Members for Linlithgow and for Norwich, North mentioned the UK stem cell foundation, about which there have been several recent reports. I understand that its specific purpose will be to fund the translation of stem cell preclinical research into clinical trials and possible treatments. As my hon. Friend the Member for Norwich, North said, it takes a long time for an initial idea to reach a stage at which it can be applied to change people's lives every day. One of the foundation's stated aims is to ensure that the UK remains at the vanguard of regenerative medicine. I understand that the principal backer of the proposal is Sir Chris Evans of Merlin Biosciences. He proposes a public-private partnership involving researchers, funders, entrepreneurs and members of the pharmaceutical industry to fund stem cell clinical trials. Plans for the proposal are well advanced.
	Before my hon. Friend the Member for Norwich, North rises to point this out, the board of the body has already been assembled, and I believe that he is a member. Other illustrious members include Sir Richard Branson, Sir Robert May, Sir Richard Sykes, Lord Winston, Trevor Jones, and Professor Roger Pedersen, who has already been mentioned. Sir Chris proposes that the UK Government should commit funding to the foundation over a 10-year period, with match funding from the private sector. The Government will be happy to consider any proposals from the UK stem cell foundation with interest. Lord Warner is meeting the foundation later this week to discuss matters of mutual interest.

Ian Gibson: Perhaps my hon. Friend will address the ethical and moral issue. I have said that there is a difference between countries in Europe, but there is also a difference between people in this country. There are still some people who are annoyed by stem cell research and embryonic nuclei being used. How do the Government see things progressing? How do we handle attempts to prevent research from going ahead on ethical and moral grounds?

Melanie Johnson: I think that we have settled a good deal of that through debates in this place. We do not see the need to reopen many of those debates. It was clear on a free vote that the ratio was about 3:1 in favour of the regulatory arrangements that we have, both the permitting ones and the banning ones. That makes it clear that we understand the value of therapeutic cloning arrangements and the use of stem cells in that context. We are completely opposed to reproductive cloning. The House has made clear its view. The majority on a free vote indicated clearly how strongly Members are in favour of the arrangements that we now have in place.

Ian Gibson: We did have eyeball to eyeball contact in the House. However, real new issues are arising. For example, there is the development of embryo cells to produce organs for what is called a save-your-sibling procedure. That creates new tensions other than the therapeutic cloning that we have debated. That was the major issue then. There are many other avenues now. We have debated these matters, but I do not think that they are over by a long shot.

Melanie Johnson: I would never suggest that any matter is over by a long shot when we debate it in the House. Obviously, debates will continue. My hon. Friend is right that some new areas of discussion and debate have opened up. Some of these areas are the subject of legal discussion and consideration. I am sure that he appreciates that I cannot comment on those. The Select Committee is giving consideration to various issues and we are looking forward to hearing what it opines before we take forward our own consideration on some of these difficult matters.

Ian Gibson: We are having one heck of a time debating human embryology and the changes that we would like to see. I have just escaped from the Select Committee and the debate is continuing. The Committee is now in its seventh hour on the report, so no one must hold their breath.

Melanie Johnson: We could be in the interesting situation of Ministers pressing the Select Committee to come to a considered view about something, which might be a reversal of how things normally happen. I look forward to seeing the results of the Committee's seven hours of deliberation.

Tam Dalyell: May I place it on the record that as one who has written an unconscionable number of letters, often on arcane scientific subjects, to my hon. Friend and to the Health Minister, my hon. Friend the Member for Doncaster, Central (Ms Winterton), as well as to Lord Warner, I am impressed by the quality of the replies that come these days from the Department of Health? It is entirely to the credit of Ministers' officials and their technical advisers that they answer seriously and in depth. I am glad that they are supporting the Department.

Melanie Johnson: I shall ensure that those kind remarks are drawn to the attention of the powers that be. I thank my hon. Friend .
	The Government have invested £45 million in stem cell research between 2004 and 2006. I have already outlined the investment that is to come. We know through life-threatening diseases such as Parkinson's, chronic heart conditions and diabetes that stem cell technology has the potential to revolutionise medicine in the 21st century, in the same way that antibiotics transformed medical treatment in the previous century. We are funding the UK stem cell bank. It is the first of its kind in the world. It is a leading venture that we wholeheartedly support.
	The UK regulatory system is well regarded and the envy of the world. We have the first regulation and first approval of research for therapeutic purposes. We now have the longest running regulatory body of its sort in the world. We have ensured that reproductive cloning has been banned. We are, of course, a world leader in stem cell research. I have outlined the research that has been permitted and the companies in which we are investing.
	I hope that I have made it clear that we are giving this matter high priority and a great deal of support. We know that funding is not the only solution. We have only to look across the Atlantic to the situation in California and other US states to be aware that money alone will not be sufficient to nurture development and to lead to the medical breakthroughs for which we are desperately hoping. We will continue to engender a regulatory environment that is as supportive and enabling as possible for UK stem cell research. We know, however, that even that will not be enough. As we have seen at the UN, it is our responsibility to commend our position on stem cell research at all opportunities in the international arena. It is only with all these approaches that the Government will continue to champion the UK as a world leader in stem cell research, both now and in the future.
	Question put and agreed to.
	Adjourned accordingly at twenty-six minutes past Eight o'clock.